Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

DEATH OF A MEMBER.

Mr. SPEAKER made the following communication to the House:

I regret to have to inform the House of the death of Adrian Charles Moreing, Esquire, late Member for the Borough of Preston, and desire to express our sense of the loss we have sustained and our sympathy with the relatives.

NEW WRIT.

For the Borough of Rochdale, in the room of William Thomas Kelly, Esquire (Manor of Northstead).—[Sir Charles Edwards.]

Oral Answers to Questions — BRITISH ARMY.

DEPENDANTS' ALLOWANCES.

Mr. Dobbie: asked the Secretary of State for War whether he is now in a position to make a statement in regard to the Government's intention as to the degree of allowance they are prepared to make to the foster-mother of a young soldier, who makes an allotment to her

for the purpose of keeping a home for his younger sister; and whether such child will rank for an allowance as the dependant of the soldier?

The Secretary of State for War (Mr. Eden): Dependant's allowance for a foster-mother or a sister is admissible under exactly the same conditions and at the same rates as for a mother or any other dependant. Not more than one dependant's allowance can be issued in respect of any one soldier.

Mr. Mathers: asked the Secretary of State for War whether he is now in a position to extend the concession in respect of Army allowances for adopted children to cover the case of children not legally adopted, but who have been maintained as part of a soldier's household before his enlistment, and are wholly dependent upon such maintenance?

Mr. Eden: The Service Departments normally only admit for "regulation" awards children who are legitimate or legitimated children or step-children of the soldier or his wife, or children who have been legally adopted. During the war, this provision has been extended to cover illegitimate children of the soldier or his wife born before their marriage, who are in fact being brought up as members of the household, and for whom no payment is being received from any other source. I am considering whether any extension is necessary.

Mr. George Griffiths: Do I understand the Minister to say that, if an illegitimate child has not been adopted although the husband of the wife is now serving, a wife can get an allowance? I have been


trying to get one for five months and cannot get it, although, of course, it is not for myself.

Mr. Eden: The hon. Gentleman will appreciate that his formula is a little bit difficult to follow.

Mr. Griffiths: May I have a word with the right hon. Gentleman before he leaves to-day?

COURT-MARTIAL SENTENCE.

Mr. Stephen: asked the Secretary of State for War whether he is aware that complaints were made to the War Office regarding the treatment at Maryhill Barracks, Glasgow, of a conscientious objector, Mr. Philip Boyle, 246, Todd Street, Glasgow, who complains that he was forcibly dressed in a military uniform and was assaulted in his cell by military police, and was afterwards sentenced to 28 days' imprisonment for refusal to obey orders; and whether he will have inquiry made into the charges of assault committed against this young man, and take steps to have this case for exemption as a conscientious objector to military service re-submitted to a tribunal for consideration?

Mr. Eden: This man's claim as a conscientious objector was, I understand, dismissed by both the local and appellate tribunals. Nevertheless, he failed to report for military duty and had to be arrested by the civil police. On arrival at his unit, he refused to put on uniform, and was subsequently tried by court-martial for refusing to obey an order. He was sentenced to 112 days' detention, of which 84 days were remitted. A court of inquiry has been held to investigate the complaints that have been made, and the evidence is that no force was used and no injury inflicted, and that the soldier made no complaint. His father was given the opportunity of calling witnesses of the alleged assault, but did not do so. Section 13 of the National Service (Armed Forces) Act, 1939, defines the circumstances in which this man could apply to have his case re-submitted to the appellate tribunal.

Mr. Stephen: Can the right hon. Gentleman say when the inquiry was held?

Mr. Eden: I cannot without notice, but my hon. Friend the Financial Secretary,

at my special request, went carefully through all the evidence, and that is the information given to me.

Mr. Stephen: Is the right hon. Gentleman aware that I have a letter from the father and a letter from one of the other prisoners stating that they were willing to give evidence?

Mr. Eden: If the hon. Gentleman has letters of that kind, I should be very glad to see them.

Mr. Maxton: Is the Minister aware that this matter is common knowledge in Glasgow and that the facts are accepted by a large section of the community? Is he further aware that the Glasgow Trades Council have specifically protested against this case, which is the only conscientious objector case about which they have felt it necessary to protest, and will he have these things in mind when he is looking into the matter?

Mr. Eden: It is precisely because of that that the inquiry was held. I was very anxious that the matter should be cleared up, but if there is any fresh evidence, I shall, of course, be glad to consider it.

LOCAL DEFENCE VOLUNTEERS.

Commander King-Hall: asked the Secretary of State for War whether he is aware that whereas Local Defence Volunteers personnel have been informed that steel helmets are not available for issue to them, yet this protective headgear can be purchased in shops at from 10s. to 15s. a helmet; and will he take steps to acquire these helmets with a view to their issue to the Local Defence Volunteers?

The Parliamentary Secretary to the Ministry of Supply (Mr. Harold Macmillan): I have been asked to reply. Urgent steps are being taken to trace any stocks of steel helmets in the hands of manufacturers or distributors, with a view to taking them over for Government purposes. Investigations from retail shops have disclosed that in general stocks are negligible or non-existent and that such retailers cannot, in fact, procure further supplies. If my hon. and gallant Friend has any information as to available supplies, I should be very grateful to receive it.

Mr. Woodburn: asked the Secretary of State for War whether he will


authorise and encourage Local Defence Volunteers to use their own initiative and military knowledge in improvising defence and offence measures in their areas to defend their localities, prevent any speedy radiation of possible invaders and use every means of sabotaging and defeating the enemy?

Sir Smedley Crooke: asked the Secretary of State for the Home Department whether he is aware that barriers on the roads which were hurriedly erected in May have since been removed; and who is responsible for this waste of public money, time, material and effort?

Mr. Eden: In answering Question No. 6, I will also answer No. 39, to which I have been asked to reply. Local Defence Volunteers are certainly encouraged to use their own initiative and military knowledge, but the independent construction of defence works, unless in conformity with a general plan, might do more harm than good. I am informed that, in some cases, private individuals have erected defence works without previous consultation with the military authorities, and that many of these were ill sited and have had to be dismantled. I should like to take this opportunity of making it clear that the military authorities should be consulted in all cases before defence works are undertaken.

Mr. Woodburn: Is the Minister aware that if 1,000 German cyclists run over the country, there will not be time to consult the military authorities as to what is to be done, and that unless the Local Defence Volunteers are encouraged to use their own initiative, there may be constant waiting for instructions from the military authorities?

Mr. Eden: I do not share the hon. Member's apprehension about 1,000 German cyclists, or even a much larger number.

Miss Rathbone: Will the Minister say whether the instructions promised by the Lord Privy Seal, as to what part able-bodied civilians of both sexes will be allowed to take in defence against enemy invasion, will soon be forthcoming?

Mr. Eden: That is quite a different Question from that on the Paper.

Sir Herbert Williams: Do I understand that Local Defence Volunteers have no responsibility for the siting of barricades?

Mr. Eden: That is not what I said. Perhaps the hon. Gentleman will read my reply.

Mr. Glenvil Hall: asked the Secretary of State for War why Councillor H. G. Stanford, of Chalfont St. Peters, Buckinghamshire, an ex-naval man, and crack shot with both rifle and revolver, who applied in proper form about six weeks ago to join the Local Defence Volunteers, has not yet been enrolled, although the section for his area is under strength?

Mr. Ness Edwards: asked the Secretary of State for War, why two members of the South Wales Miners Federation, resident in the village of Trelewis, Glamorgan, have been refused the right to enrol in the Local Defence Volunteers; and what authority determines who is eligible for enrolment?

Mr. Kenneth Lindsay: asked the Secretary of State for War whether he is aware of the circumstances in which Mr. James Bostock, group-commander of the Stafford Local Defence Volunteers, left the force; and what action he proposes to take?

Mr. Eden: I am making inquiries into these cases, and will communicate with my hon. Friends as soon as possible.

Mr. Glenvil Hall: Is the right hon. Gentleman not aware that I wrote him about this case almost a month ago?

Mr. Eden: I think the hon. Member will appreciate that individual cases of men who want to join the Local Defence Volunteers cannot be dealt with by my Department, but I will certainly do what I can.

Mr. Shinwell: Has the right hon. Gentleman issued any instructions to local commandants as to who should be permitted to join and who should be rejected? Is it possible for Members to see what instructions have been issued?

Mr. Eden: Certainly there were general rules. I can give the hon. Member information about them.

Mr. Charles Brown: Is the right hon. Gentleman sure that political discrimination is not being made?

Mr. Eden: ; I am absolutely sure. I think the Local Defence Volunteers themselves are quite confident of that.

Mr. Glenvil Hall: Does the right hon. Gentleman think he will still be of that opinion when he has examined this case?

Mr. Eden: Yes, I do.

Mr. Cocks: asked the Secretary of State for War whether he will take steps to accelerate the supply of arms to members of the Local Defence Volunteers, especially to those who are members of the British Legion and ex-Service men?

Mr. Eden: Everything in my power is being done to accelerate the supply of arms to Local Defence Volunteers.

Mr. Cocks: Will the right hon. Gentleman remember that, although Sparta did not have walls, it had weapons?

Mr. Woodburn: Is the right hon. Gentleman aware that much defence could be carried out without arms, that there are any number of expedients that could be used, and that the Local Defence Volunteers should be encouraged to use them?

DEFENSIVE MEASURES.

Mr. Mander: asked the Secretary of State for War whether he will give an assurance that adequate measures have been taken to secure the protection, in all circumstances, of public utility concerns, such as electricity, water and gas undertakings either by Regular Army contingents or Local Defence Volunteers?

Mr. Parker: asked the Secretary of State for War whether he will have important trains running in areas liable to air-raids armed with anti-aircraft guns?

Mr. Cocks: asked the Secretary of State for War whether consideration is being given to the provision of bulletproof shields as a protection against machine-gunning from the air?

Mr. Gledhill: asked the Secretary of State for War whether adequate arrangements have now been made for guarding power stations, waterworks and other important local services?

Mr. Eden: I think my hon. Friends will agree that it would be very undesirable for me to make public statements about details of our defence schemes, and I hope they will accept my assurance that our plans include all protective measures that are considered practicable and make the best use of our resources.

Mr. Mander: Is my hon. Friend aware that not everybody is quite satisfied about this, and will he give me an opportunity of making private representations?

Mr. Eden: I am only too ready at any time to receive private representations. It is the public representations that I do not favour quite so much.

Mr. Glenvil Hall: Once we have made our representations, will something be done?

Mr. Eden: I cannot undertake to say that such views will necessarily override those of the military authorities, but I can promise that they will be given all consideration and will be discussed.

Mr. Cocks: asked the Secretary of State for War whether the military authorities in charge of local defences are acting in full co-operation with the county surveyors in respect to the siting of barricades and other obstructions and defensive measures?

Mr. Eden: The military authorities are co-operating fully with the local authorities in these matters.

Sir H. Williams: Can my right hon. Friend say whether that is true of the Purley and Coulsdon Urban District Council, which was not co-operating in the slightest degree last Friday?

Mr. Eden: Obviously, I cannot answer for every urban district in the country.

MISSING SOLDIERS (PAY AND ALLOWANCES).

Sir John Jarvis: asked the Secretary of State for War the periods for which pay and allowances continue to be made by his Department in the case of soldiers who are reported missing or missing believed killed; and whether he is aware of the anxiety of many wives at the present time to have an official ruling on the matter?

Mr. Eden: The regulations regarding the continuance of pay and allowances when soldiers are "missing" or "missing believed killed" were published in an Army Order dated 16th May, 1940, of which I am sending my hon. Friend a copy. A full explanation is sent to the wife or known dependant in each case by the officer in, charge of records shortly after the notification of the casualty is made.

MEMBERS OF PARLIAMENT (PASSES).

Mrs. Tate: asked the Secretary of State for War whether he will issue a special pass to Members of Parliament which would enable them to move freely about the country in pursuance of their duty should roads and railways be closed to the public?

Mr. Eden: I would refer the hon. Lady to the answer I gave to my hon. Friend the Member for Aberdeen, North (Mr. Garro Jones), on 9th July last.

Sir Henry Morris-Jones: When will this pass be issued?

Mr. Eden: Arrangements are being made, and I hope to be able to make a statement on Thursday.

ORDNANCE CORPS (ENGINEERS).

Mr. Ellis Smith: asked the Secretary of State for War why skilled engineers of the Royal Army Ordnance Corps are spending their time doing ceremonial drill, route marching, farming, etc., in view of the appeals being made for increased output in industry: and, in view of the moral effect on the men, will he take steps to see that their services are used to better advantage?

Mr. Eden: I do not know of any such cases as my hon. Friend refers to, but if he has any information on the subject, I shall be glad if he will let me have it. He will appreciate, however, that the circumstances in which the British Expeditionary Force returned to this country resulted in considerable dispersion of units, and interruption of normal employments. On reorganisation, which is being effected as rapidly as possible, tradesmen will be appropriately employed.

Mr. Smith: If I furnish the right hon. Gentleman with some evidence of this, will he give an undertaking that the men's names will not be divulged?

Mr. Eden: No possible harm would come to the men on that account.

LICENSED PREMISES (RESTRICTIONS).

Lieut.-Commander Tufnell: asked the Secretary of State for War whether his attention has been called to the issue of orders at Cambridge under which Army men are ordered to quit licensed premises half an hour earlier than naval or Royal Air Force men; whether there

is any reason for such differentiation which is causing resentment; and whether he will take steps to ensure equal treatment of all fighting men in this respect?

Mr. Eden: In certain areas, the hours of night duty have made it necessary to impose restrictions on visits to licensed premises. The same considerations may not apply to naval or Air Force men in these areas.

CONTRACTS (INQUIRY).

Mr. Thurtle: asked the Secretary of State for War whether he is now in a position to announce the result of the court of inquiry held some months ago regarding alleged irregularities in connection with Government contracts?

Mr. Eden: Yes, Sir, but as the answer is long, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Mr. Thurtle: Has any disciplinary action been taken or not?

Mr. Eden: I should be grateful if the hon. Member would read the reply. I am rather anxious not to try to epitomise it.

Following is the answer:

A court of inquiry was constituted last February to inquire into the circumstances surrounding the introduction in 1939 of Mr. Charles Kingsley Scott to a certain firm of Government contractors and/or their representatives, and, in particular, into the action of any military officer concerned and into matters incidental thereto. The Court, after hearing evidence on seven days, submitted a report to the Army Council. The following military officers, Colonel J. H. Howell-Jones, C.I.E., D.S.O., a Chief Progress Officer at the War Office and subsequently at the Ministry of Supply until 30th October, 1939, Lieut.-Colonel S. T. Hayley, D.S.O., O.B.E., liaison officer for the Director of Ordnance Stores at the War Office in connection with the equipping of T.A. units and with the raising of T.A., R.A.O.C. units, and Major D. C. MacGillivray, Progress Officer for the Midland Area under Colonel Howell-Jones, were present on all occasions when the Court heard evidence or argument, and Lieutenant R. F. Rowland, R.A.O.C., was similarly present, except on the first day. The Army Council came to the following conclusions in regard to the


conduct of these officers in respect of the introduction of Mr. C. K. Scott to the firm referred to in the terms of reference.
(1) Lieutenant-Colonel Hayley made the acquaintance in June, 1939, of Mr. Scott, who has served a sentence of imprisonment for fraudulent conversion and was not a person who should ever have been introduced by an officer for the purpose of assisting in any financial transaction. Within a couple of months, Lieutenant-Colonel Hayley became a close friend of Mr. Scott, and about the beginning of September, as a result of an inquiry by Mr. Scott, he put him into touch with Colonel Howell-Jones with a view to Mr. Scott finding, on a profit-making basis, finance to enable the firm referred to above to carry out certain store contracts for the Ministry of Supply. At that time Lieutenant-Colonel Hayley did not know that Mr. Scott had been in prison. He refused an offer made by Mr. Scott of a share in the profits anticipated from the proposed financial transaction, but he accepted from Mr. Scott the offer of a business introduction with a view to employment after the termination of his military service. Although the Council were satisfied that the recommendation of Mr. Scott to Colonel Howell-Jones was not given by Lieutenant-Colonel Hayley for any corrupt purpose, it was clear that, while Lieutenant-Colonel Hayley was unwilling to make a direct profit, he was not averse from gaining an indirect advantage if that should accrue after leaving the service and from a reputable source. The choice of friends must be a matter of personal taste, but the Army Council considered that, when Lieutenant-Colonel Hayley realised, as he must then have done, that his friendship and introduction were being made use of for private gain, it was most unwise of him to continue the easy-going relationship into which he had got.
At a later date, Lieutenant-Colonel Hayley stated on Mr. Scott's form of application for enrolment into the Army Officers Emergency Reserve that he considered Mr. Scott was suitable for a temporary commission. The Court found that by the time Lieutenant-Colonel Hayley signed the form he had learnt that Mr. Scott had been in prison, and the Council accepted that finding. They considered that for Lieutenant-Colonel Hayley to have signed the application while keeping silent as to his knowledge of Mr. Scott's criminal past showed a complete lack of appreciation of his responsibilities and duties as an officer.
In view of the above considerations, the Army Council decided to terminate this officer's employment in the Army. Lieut.-Colonel Hayley submitted a petition to the King in accordance with the provisions of Section 42 of the Army Act, but, after careful consideration by the Army Council, I found myself unable to advise His Majesty to issue any special instructions in regard thereto.
(2) Colonel Howell-Jones, through his subordinate, Major MacGillivray, effected Mr. Scott's introduction to the firm referred to above. He failed to make any inquiries at all as to the character, standing or resources of the person he thus sponsored. on the

grounds that the bona fides of a prospective financier or financial representative was a matter for the firm and not for him. The Council dissented from this view. They considered that the conduct of Colonel Howell-Jones was open to criticism on this point, namely, that at a time of unexampled stress he failed to realise that the mere fact of an introduction coming from him and made formally and officially by his subordinate lent to Mr. Scott a weight and authority which otherwise he could never have obtained; they were of opinion that it was his duty either to have made some inquiries about Mr. Scott before effecting the introduction [...] to have made it clear that he had not done so. Colonel Howell-Jones was working under very great difficulties and, in the Council's view, was actuated throughout only by an urgent desire to promote the flow of equipment for the Army. In the circumstances, the Council decided that it was not necessary to do more than to warn Colonel Howell-Jones as to his future conduct.
(3) Major MacGillivray introduced Mr. Scott to the firm referred to formally and officially and did not vouch for him personally. In so doing, Major MacGillivray was merely carrying out his orders and the. Council considered that no blame attached to him.
(4) The name of Lieutenant Rowland was mentioned in connection with some of the financial negotiations between Mr. Scott and certain associates with the firm in question. Lieutenant Rowland was a civilian at the time and was not granted a commission until December, 2939. In the circumstances, the Council came to the conclusion that there was nothing in his conduct which reflected on his military reputation.

NAZIS AND ANTI-NAZIS (TRANSFER OVERSEAS).

Mr. Rhys Davies: asked the Secretary of State for War what steps are taken to acquaint the relatives in this country of the new address of refugees of Nazi oppression who have been sent overseas?

Mr. Wedgwood: asked the Secretary of State for War (1) whether he can give an undertaking that Jews and anti-Hitler aliens will not be sent to Canada without their wives, and that they will not again be shipped with Nazi internees and prisoners?
(2) Whether he will give an assurance that no more German anti-Nazi Jews will be deported in company with Nazis, as was the case on the "Arandora Star"?

Mr. G. Strauss: asked the Secretary of State for War whether he can make any further statement concerning the category of enemy aliens on the "Arandora Star"; and, in particular,


whether these included refugees from Nazi oppression?

Mr. Eden: The interned enemy aliens on board the "Arandora Star" were Italian Fascists and Category A Germans. It was understood by my Department that none of these Germans were refugees, but I am making further inquiries on this point. There were no prisoners of war on board. I can give the House the assurance that it is not the intention to send abroad anti-Nazis in contact with Nazis, and it is hoped to arrange that any further Category B and Category C Germans who are sent abroad will be accompanied or followed by their families. Steps will be taken to inform relatives of addresses overseas as soon as they are known.

Mr. Rhys Davies: Will the right hon. Gentleman bear in mind the terrible agony of parents, and especially of wives?

Mr. Eden: That is what I am trying to cover by the reference that I am trying to make.

Mr. Wedgwood: Are we to understand that there were no C Category Germans—anti-Nazi aliens—on the "Arandora Star"? How does the right hon. Gentleman account for the fact that some of these are known to have been saved? Did the War Office really not know who were on board that ship?

Mr. Eden: What I said was that these were all category A.

Mr. Wedgwood: Surely the right hon. Gentleman must know by now—he has the names of those who were saved—that they were not category A but categories B and C?

Mr. G. Strauss: Is the right hon. Gentleman aware that some of the men on the "Arandora Star" were sentenced to terms of imprisonment by the Nazis and others beaten up by the Nazis, and that they were accepted into the country by the Czech Representative Committee?

Mr. Eden: I have gone into the question carefully, and that is the assurance that I was given. In view of what the right hon. and gallant Gentleman says, I will go into it again.

Sir H. Williams: Will the right hon. Gentleman give an assurance that no category C Germans will be sent out of the country until there has been some oppor

tunity to examine whether or not they should be released?

Miss Rathbone: Is the right hon. Gentleman aware that there were on hoard several very distinguished anti-Fascist Italians, of whom at least one was drowned?

FRENCH FOREIGN LEGION.

Mr. Wedgwood: asked the Secretary of State for War, concerning the French Foreign Legion which fought beside British troops in Narvik and is, or was, recently in this country, whether he can say how many of the Spaniards, French, Jews, etc., of the rank and file are now interned or in prison in this country or have deserted because they were unwilling to serve under officers in sympathy with the Pétain Government and wished to serve under British officers; and when the report of the inquiry to be held into this matter and the conduct of Major Ruding Bryan may be expected?

Mr. Eden: There are at present 114 legionaries who are detained in a camp in this country, all of whom have volunteered to serve under General de Gaulle. The reason for their detention is the commission of offences against French military discipline, and this detention was carried out at the request of the French officer commanding who was General de Gaulle's representative at Trentham. Of this number, 16 are men who had absented themselves, but I am unable to state the reason for their absence. There are also others in military custody who had absented themselves but who are not volunteers. These are also detained at the request of General de Gaulle. There are no legionaries in prison in this country.
I have had an inquiry made into the allegations made against Major Ruding Bryan's conduct, with specific reference to the Supplementary Question put by my right hon. Friend on 9th July, and the charge that Major Ruding Bryan was a Fascist. As a result of this inquiry, which was attended by individuals who had been concerned in the framing of these allegations, I am satisfied that they have no foundation of truth. No evidence was produced that Major Ruding Bryan had used his influence in any way to persuade the French troops to return to France; that he was a Fascist or had


any connection with the Fascist organisation; or that he refused to allow the circulation of a leaflet giving the terms of the Armistice signed by the French Government, and had thus destroyed our chance of getting over 10,000 into the British Army. Moreover, General de Gaulle has authorised a statement to the effect that neither he nor any of his officers has any complaint to make against Major Ruding Bryan and that the latter has been most helpful in all that he has done. I am satisfied that Major Ruding Bryan has carried out a difficult task very well and has earned the approbation of those under whom and with whom he has been serving.

Mr. Wedgwood: Did the right hon. Gentleman take the evidence and the names that I gave?

Mr. Eden: Yes, Sir.

Mr. Wedgwood: Is it not a fact that 8,000 of those Frenchmen were sent back to France with their machine guns and their arms?

Mr. Eden: That is quite another question. That is not Major Ruding Bryan's fault. That is another issue. What I was anxious to do was to clear this officer's reputation.

Mr. Shinwell: Does the right hon. Gentleman agree that 8,000 Frenchmen returned to France with their machine guns and rifles?

Mr. Eden: If the hon. Gentleman wants details, perhaps he will put a Question down.

Mr. Sorensen: Is the right hon. Gentleman aware that there is in Pentonville Prison a young man who served with the French Army and who came to this country and has been in prison since that time?

Mr. Eden: I cannot say as to any particular case. What I say is that all this has been worked out with General de Gaulle and his officers, and this charge against a British officer is quite unfounded.

Oral Answers to Questions — SCOTLAND.

CALDERWOOD ESTATE, EAST KILBRIDE.

Mr. Mathers: asked the Secretary of State for Scotland what was the price

paid for Calderwood Estate, East Kilbride, Lanarkshire, by the Special Areas Commissioner; what is the estimated cost of erecting cottages and carrying out other improvements since the estate was acquired; whether the subjects are producing food to full capacity at present; and why they are being offered for sale instead of being converted into smallholdings?

The Secretary of State for Scotland (Mr. Ernest Brown): The price paid for the Calderwood estate by the Commissioner for the Special Areas in Scotland was £14,500. Subsequent capital expenditure is estimated at £17,000, including £6,500 for cottages and £7,900 for tomato houses. The experiment for which the estate was originally acquired was concluded last year, when it was decided after careful consideration that owing to the nature of the land the property was not one which could be converted into smallholdings with any prospect of success. The estate has since been fully developed as a dairying subject and for the production of glass house crops.

ANTI-TYPHOID INOCULATION.

Mr. Robert Gibson: asked the Secretary of State for Scotland whether, in view of possible breakdown of provisions for sanitation in local areas, he will consider taking steps to have the whole population inoculated against typhoid fever; and whether he has any statement to make on the subject?

Mr. E. Brown: I do not think that inoculation of the whole population against typhoid fever is practicable or advisable. Facilities are available for anti-typhoid inoculation where required.

Mr. Gibson: Is it not the case that this is the usual practice in the Army? Can the right hon. Gentleman suggest any alternative method of protection against typhoid in these circumstances?

Mr. Brown: Certainly, there is a number of methods. My hon. learned Friend will be glad to know that there is a considerable quantity of typhoid and para-typhoid vaccine now held at several centres in Scotland, and that this can quickly be made available in any region where there is special risk. The local authorities are aware of these reserves.

MEDICAL PRACTITIONERS.

Mr. R. Gibson: asked the Secretary of State for Scotland whether, in the event of an invasion, each medical practitioner in every locality has been allocated a station and is cognisant of the duties expected of him; and whether he has any statement to make on the subject?

Mr. E. Brown: A large number of medical practitioners are allocated to definite posts in the casualty services and the health services generally. I do not think, however, that it is possible or desirable for every practitioner in the country to be allocated to a fixed post as my hon. and learned Friend suggests. For invasion conditions it is necessary to have fluidity and arrangements to that end have been made.

Mr. Glenvil Hall: Does the right hon. Gentleman know that in some areas which have been evacuated the doctors have nothing to do, whereas in other places to which people have gone the doctors have too much to do?

Mr. Brown: In the Question my hon. and learned Friend was asking that all doctors should have fixed stations.

CHILDREN'S OVERSEAS RECEPTION SCHEME.

Mr. Ammon: asked the Under-Secretary of State for Dominion Affairs whether the recent announcement that all ships leaving these shores for the United States of America would carry children evacuees from this country is to be taken as part of the official scheme recently submitted to Parliament, and what proportion of the children are to be drawn from State-aided schools?

The Under-Secretary of State for Dominion Affairs (Mr. Shakespeare): I am not sure to what announcement the hon. Members refers, but up to the present time no children have been sent to the United States of America under the Children's Overseas Reception Scheme. I would, however, ask the hon. Member to await the statement which is being made to-day by my right hon. Friend the Lord Privy Seal.

Mr. Ammon: Is it the case that so far only children of the well-to-do have been

evacuated, and if it was possible to send them, why was it not possible to make arrangements for some of the others?

Mr. Shakespeare: No doubt that point will be covered by my right hon. Friend.

Mr. James Griffiths: Will the Minister bear in mind that there will be considerable feeling in the country, particularly in areas where there is bombing and where there are no shelters for the children, if well-to-do children are allowed to leave the country?

Mr. Mander: Is it not true that several hundred British children sailed on the "Washington" the other day?

Sir H. Williams: What proportion of the children have opted to go to Canada and the United States, respectively?

Mr. Shakespeare: To give an estimate only, I should say that the parents of well over 50,000 children have opted for Canada and well over 20,000 children for the United States of America.

Mr. Stokes: Is the hon. Gentleman aware that there is great indignation in the country at the number of children of Cabinet Ministers who have left the country?

Major Sir Jocelyn Lucas: Would the Government be prepared to support voluntary schemes?

Mr. Lindsay: asked the Under-Secretary of State for Dominion Affairs how many applications he has received for children to go overseas from grant-aided and from other schools, respectively; how many offers he has received from the Dominions and from the United States of America; and how many children have already departed outside the official scheme?

Mr. Shakespeare: I am unable to give exact figures, but it is estimated that applications have so far been received in respect of about 158,000 children from grant-aided schools and 16,000 children from other schools. In addition it is estimated that some 25,000 children are covered by Scottish applications. The first offers received from His Majesty's Governments in the Dominions were to take 20,000 children, but it has been made clear that this figure could be greatly increased. No final statement has yet been received of the numbers of children


for whom there are direct offers of support in the United States of America, but according to a statement issued on 14th July a number of children under 16 years, only depending on shipping facilities and private assurances of support, will be admitted to the United States on visitors' visas for two years; this period can subsequently be extended on condition that they return at the end of hostilities. The number of British children aged 5 to 15 years who left ports in the United Kingdom in June, 1940, for the Dominions and the United States of America were 1,572 and 306 respectively; of these 1,454 and 298 respectively had their normal residence in the United Kingdom.

Mr. Lindsay: Would it be true to say that there were roughly 200,000 children trying to go, whereas there were 20,000 offers from the Dominions?

Mr. Shakespeare: That is so.

Mr. R. Gibson: What proportion of the 25,000 applications from Scotland were from local authority schools and what proportion from others?

Mr. Stephen: Did the Minister say that the children on those ships had naval protection?

Mr. Shakespeare: That point will be covered by my right hon. Friend.

At the end of Questions—

The Lord Privy Seal (Mr. Attlee): The House has already been made aware of the extremely generous offers for the reception and maintenance of British children during the war that have been made from Canada, Australia, New Zealand and the Union of South Africa, and also from the United States of America. These offers were already sufficient to account for a very substantial number of children, and I have no doubt that they by no means indicate the limit of the hospitality which might ultimately be made available overseas.
As regards the response in this country, the number of children for whom applications were made exceeded the number for whom hospitality had been offered. The Government would have no difficulty in providing the shipping required for the children thus offered hospitality, as sufficient tonnage could be made available. On the other hand, the Government

feel strongly the responsibility that rests upon them to see that any children who go overseas under the Government scheme should have such naval protection as would reasonably ensure the safety of their passage during the voyage. The fate of the "Arandora Star" shows that even a fast passenger vessel cannot always rely for safety on her speed if she is unescorted.
Unfortunately, a radical change in the situation since application, were first invited has occurred as a result of the loss of the services of a large part of the French Fleet. In present circumstances it is essential to concentrate our whole naval forces on the task of meeting the overriding demands of national security. It is this consideration alone which has forced the Government reluctantly to the conclusion that they must postpone the operation of the scheme for the transference of children overseas until the situation at sea enables them to provide naval escort for the ships employed for this purpose.
Similarly, the Government feel that there must be a postponement of the special arrangements which they were prepared to make in cases where schools here had planned to transfer pupils to schools in Canada.
Ordinary fast passenger vessels are not escorted, and if children are carried on such vessels outside any Government Scheme the responsibility for any risks on the voyage would not be on the Government. In any case, the number of such children must be limited, since I am bound to repeat that the imperative necessity of conserving our dollar resources to meet other essential demands makes it impossible to allow the remittance of funds in any form for the purpose of their maintenance in Canada and the United States of America.
The Government realise that the postponement of their scheme, although inevitable, is bound to cause great disappointment among parents here, and also amongst those who in the Dominions have so wholeheartedly co-operated in making preparations for the reception and maintenance of the children. I desire to assure them that we keenly appreciate their generosity and deeply regret the inconvenience which the postponement of our scheme is bound to cause them.
To those also in the United States of America who have spared no effort to find a home for British children, I would like to express on behalf of His Majesty's Government our warmest thanks. I hope that our scheme is only temporarily suspended and that we may yet be able to take advantage of that warm-hearted hospitality so spontaneously and readily offered.

Mr. Ammon: May I ask the Lord Privy Seal whether he is right in saying that the United States, in inviting a number of children over there, made any stipulation that the children were to come from State-aided schools or from the well-to-do; and whether those children who have recently been received went out on ships that were unescorted—those children of members of the Cabinet and others?

Mr. Attlee: In regard to the first question, the United States desired a balanced number of children, that is to say, children representing all classes. With regard to the children who have been evacuated otherwise in the past, they have gone on unescorted vessels.

Mr. Ammon: Was there any balance? Did any children from State-aided schools go quite recently?

Mr. Attlee: No, Sir, because the scheme had not started.

Mr. Ammon: Then does it not mean that the scheme was merely camouflage to get out the well-to-do?

Mr. Attlee: No, Sir, on the contrary, the scheme would have provided for a much bigger proportion of children from the State-aided schools, but it has had to he held up for the reasons which I have given.

Mr. J. Griffiths: Does the Lord Privy Seal realise that there is great resentment in my own part of the country, where children without shelter have gone through all that has taken place in the last few days, when people read in the Press that children of responsible public men who were recently appealed to by the Prime Minister to show an example have taken their children away from the danger while leaving the poor children here?

Mr. Mander: Were not the possibilities as to the French Fleet perfectly well known two or three weeks ago when the

scheme was first brought forward, and is it not very regrettable that it was brought forward at all in such circumstances?

Mr. Attlee: I do not think that the circumstances were known.

Mr. Lunn: Is my right hon. Friend aware that it is commonly held in the country that, now you have some thousands of rich people's children away overseas, there are to be no opportunities whatsoever for children from the elementary schools?

Mr. Attlee: No, Sir, my hon. Friend is mistaken. The whole purpose of the Government's scheme was that there should be a proper proportion of children from the elementary schools. It is obvious from the scheme. There would be a certain number of children going, in future, in convoyed ships, and some 3,000 or 4,000 of those children would have been going from grant-aided schools and schools under various private schemes put up by authorities in England and by bodies in the United States and Canada. It is hoped to resume those whenever possible and whenever the military situation will allow. [HON. MEMBERS: "No."] The Government are not prepared to take the responsibility of sending out children without proper protection.

Mr. Maxton: Does the reply of the right hon. Gentleman, which specifically mentioned Canada and the United States, include Australia, the Union of South Africa and New Zealand?

Mr. Attlee: My statement referred to all the Dominions, and if by any chance I said Canada, I intended to say the Dominions as a whole.

Mr. Lindsay: In view of the facts which have just been stated, is it not clear that the scheme was not thought out from the beginning, that the position in regard to dollars was perfectly well known three or four weeks ago, and that the children who have just gone out must have come from richer homes, because the fares have had to be paid?

Mr. Granville: In view of the fact that some of these children left in neutral ships and in the American ship "Washington," is it the intention of the Government to give permits for children to leave in the future in neutral or in American ships?

Hon. Members: Answer.

Mr. Attlee: I have answered. If hon. Members had kept quiet, they would have heard it. The answer is that I must have notice of that Question.

Mr. Wilfrid Roberts: Would it not rectify the situation now if a cheap fare were instituted, so that parents of whatever means would be able to take advantage of it, if they liked to do so, with the limited space which is available upon cross-Atlantic steamers?

Mr. J. Griffiths: Do the Government approve, and the Foreign Office give, permits to children of wealthy people in public positions to leave this country, at a time when this scheme is being dropped?

Mr. Attlee: It is not a question for me. The point is that, hitherto, where parents were prepared to take the risk, they could send the children on unescorted ships. It is hoped there will be a certain number of children under this scheme, in a few cases, where it is possible to provide for their being properly convoyed—a limited number. To that extent the scheme will be going forward, and there will be given some opportunity, though not very much, for children from grant-aided schools. The present scheme must be postponed until it is safer.

Sir Percy Harris: Will the right hon. Gentleman give an opportunity for discussing the situation, which is causing much concern, and requires full explanation?

Mr. Attlee: Certainly, Sir.

Mr. J. Griffiths: On a point of Order. I beg to give notice that, in view of the public interest in it, I will raise this matter on the Adjournment.

Oral Answers to Questions — CIVIL DEFENCE.

SUBVERSIVE ACTIVITIES.

Lieut.-Colonel Sir Thomas Moore: asked the Secretary of State for the Home Department whether he has now declared illegal all organisations and societies whose activities are calculated to undermine the national effort and will to victory?

The Under-Secretary of State for the Home Department (Mr. Peake): I presume my hon. and gallant Friend refers to

the exercise of powers conferred on my right hon. Friend by Defence Regulation 18AA. My right hon. Friend has already made an order applying that Regulation to one organisation, and he will not hesitate to use the power in respect of any other organisation if he is satisfied that the conditions precedent Lave been fulfilled.

Mr. Thurtle: asked the Home Secretary whether he is aware that ex-military officers of high rank of known Fascist sympathies are in a special degree a potential menace to national security; and whether he is keeping under observation the activities of such officers?

Mr. Peake: The hon. Member will not expect me to give particulars as to the persons whose activities are being kept under observation. If, however, he has any individual cases in mind and is in a position to give me information, I shall be very glad to receive it.

Mr. Thurtle: May I take it that the hon. Gentlemen means that even if a man is of such rank as ex-major-general, the Department will still be prepared to investigate his activities?

Mr. Peake: Most certainly, but, of course, I can hardly assent to the proposition in the Question that ex-military officers as such constitute a special danger.

Mr. Thurtle: If their record shows that they have had Fascist affiliations and sympathies, does not that alter the case?

Mr. Peake: I have asked the hon. Gentleman to furnish me with any information which he has at his disposal, and I shall be very glad to have it.

Sir H. Williams: Does the hon. Gentleman agree with me that some of these ex-military officers are a considerable danger when they will insist on joining the Local Defence Volunteers?

DEFENCE AREAS (VISITS TO HOSPITALS).

Mr. R. C. Morrison: asked the Home Secretary whether he will make it clear that the Regulations for entering prescribed areas will not debar relatives of wounded men in hospitals within these areas from visiting them?

The Parliamentary Secretary to the Ministry of Home Security (Mr. Mabane): Yes, Sir. It was made clear in a recent announcement that persons wishing to


visit sick relatives in a Defence Area will ordinarily be allowed to do so. This, of course, applies equally to visits by relatives to wounded members of His Majesty's Forces.

Mr. Sorensen: Will that apply also to civilians who wish to visit sick relatives?

Mr. Mabane: I said so.

AIR-RAID SHELTERS (SCHOOLCHILDREN).

Mr. Lindsay: asked the Prime Minister who is responsible for deciding the nature of air-raid shelter for schoolchildren in various parts of the country?

The President of the Board of Education (Mr. Ramsbotham): I have been asked to reply. The local education authority, in consultation with the local A.R.P. authority, are primarily responsible for determining the arrangements for protection of schoolchildren which are best suited to the circumstances of a particular locality or school. My Department's function in the matter is to give such general advice as may from time to time appear to be desirable and to approve, through His Majesty's inspectors, the estimated expenditure on the provision of protection.

Mr. Lindsay: Who is responsible for deciding, in view of the changed circumstances, whether an area shall have shelter? There is complete misunderstanding in different parts of the country on this question.

Mr. Ramsbotham: The hon. Member has completely forgotten the policy which he so recently administered. The material point is not the classification of an area into an evacuation or neutral or reception area as the case may be, but the view taken by the local education authority in consultation with the local A.R.P. authority subject to the approval by the Board of Education of the expenditure.

Mr. Ammon: What financial assistance is the Minister willing to give to the local authorities?

Mr. Ramsbotham: The minimum amount is 50 per cent. with an increase in the case of the poorer authorities in accordance with the present grant regulation.

SILICOSIS.

Mr. Tomlinson: asked the Home Secretary whether there is any provision

for an appeal against a decision of the Silicosis Board where there is a conflict of evidence between the Board's medical advisers and that of other medical experts; and, if not, will he consider the advisability of making such provision at an early date?

Mr. Peake: No, Sir. There is no provision for appeal. The members of the Board have unrivalled experience in the diagnosis of silicosis, and I fail to see what better final authority one could have.

Mr. Tomlinson: Is the Minister so convinced of the infallibility of these particular medical advisers that he believes they can never be wrong?

Mr. Peake: I would only say that a very high tribute was paid to the Silicosis Board by the representatives of the Trades Union Congress in their evidence before the Royal Commission.

Mr. Tomlinson: If these same representatives were to present the case which I presented some little time ago to the Minister, would he be prepared to give it further consideration?

Mr. Peake: I will certainly look into any case the hon. Member sends me.

BIRTHDAY HONOURS LIST.

Mr. Turton: asked the Prime Minister why His Majesty's Birthday Honours list was not published in full in the Press of Thursday, 11th July; whether any arrangements were made for additional paper to be available so as to secure due publicity for awards for gallantry in His Majesty's Forces; and whether he will now take steps to give the public details of these awards?

Mr. Attlee: The Birthday Honours list which was confined to military Honours, was published in full on 11th July in the London Gazette, but the Order limiting the number of pages made it impossible for the daily newspapers to reproduce the whole list. No applications were made by representatives of any newspapers for licences to increase the number of pages allowed under the Order, and I am informed that the Press would not welcome the issue of licences for this purpose.

Mr. Turton: Is my right hon. Friend aware that many soldiers, sailors and airmen do not yet know that the King has


honoured them in the King's Birthday Honours list? Is it not a very mean way of rewarding gallantry not to give extra paper for the publication of these honours, in view of the fact that extra paper is given for company reports?

Mr. Attlee: As I have already stated, no application for extra paper was made.

Mr. Turton: Is it not the duty of His Majesty's Government to see that the King's Birthday Honours list is given due publicity in the newspapers?

Sir H. Williams: At what time did the newspapers know the length of the list, and how long does it take after they make application before they receive the paper?

Mr. Attlee: A statement was issued to the Press on 25th June informing them of the date of publication.

MIDDLE EAST (WAR SITUATION).

Mr. Wedgwood: asked the Prime Minister whether he will make a statement as to the progress of the war in Libya, Ethiopia and Somaliland; whether these fronts have been defensive or offensive, and how the situation was affected by the Italian occupation of Kassala; and whether any steps have been taken to secure Abyssinian co-operation?

Mr. Eden: I have been asked to reply. All that can be disclosed regarding these operations has already been published in the communiqués which have been issued. As regards the last part of the Question, I cannot add anything to the answer given to my right hon. and gallant Friend by the Parliamentary Under-Secretary for Foreign Affairs on Thursday last.

Mr. Wedgwood: Is the right hon. Gentleman completely satisfied with what has happened in Kenya and Libya?

Mr. Eden: I can say that the Government have the most complete confidence in Lieut.-General Sir Archibald Wavell and those serving under him.

Oral Answers to Questions — NATIONAL WAR EFFORT.

WAR MATERIAL (INSPECTION AND SPECIFICATIONS).

Rear-Admiral Sir Murray Sueter: asked the Minister without Portfolio whether his attention has been drawn to

the restriction in output of war material due to unduly rigid methods of inspection; and what steps are being taken to remove this hindrance to our war effort?

The Minister without Portfolio (Mr. Arthur Greenwood): My right hon. Friend the Minister of Supply has issued instructions to his inspectorate staff to reduce inspection to the minimum compatible with safety and efficiency, and there is little doubt that these instructions are now being carried out. So far as aircraft contracts are concerned, I would refer my hon. and gallant Friend to the reply given by the Parliamentary Secretary to the Ministry of Aircraft Production to my hon. Friend the Member for Broxtowe (Mr. Cocks) on i9th June.

Mr. Stokes: Do the same remarks and instructions apply to the Admiralty?

Mr. Greenwood: I cannot answer that question without notice, hut I imagine so.

Mr. R. C. Morrison: Is the Minister aware that a very large number of these inspectors are comparatively young men with considerable skill who would be much more useful on the bench, while, on the other hand, there are a great many skilled men getting on in years who perhaps are not able to do a full day's work on the bench, but who would be excellent as inspectors?

Mr. Greenwood: One of the reasons why we are anxious to diminish the number of inspectors to the minimum amount is to release these men; on the second point, I will look into it.

Mr. A. Edwards: Will the Minister considering removing redundant inspectors, in view of the fact that there is a multiplicity of inspectors representing various Departments, and that in some of the shops the men can hardly move for inspectors?

Mr. Greenwood: The whole purpose—and I am giving it personal consideration —is to diminish the amount of inspectors to the minimum compatible with efficiency of service.

M. Sueter: asked the Minister without Portfolio whether his attention has been called to the hindrance of production and the unnecessary cost to the State caused by over-elaborate specifications; and what steps are being taken to deal with this problem?

Mr. Greenwood: The Ministers of Supply and Aircraft Production give constant attention to this matter and maintain close contact with manufacturers to ensure that unnecessary elaborations of specifications are eliminated. Suggestions from manufacturers to this end, and for speeding up production generally, are welcomed.

Sir Joseph Lamb: Is the Minister aware that handrails and balustrades of stainless steel were specified for one camp?

Mr. Greenwood: I am not aware of that, but the whole object of the decision which we have taken is to eliminate that kind of useless production.

Sir J. Lamb: Is the Minister aware that I recently gave information with regard to this matter?

Mr. Greenwood: I am not aware of that, but I will look into it.

BRITISH PURCHASING COMMISSION, NORTH AMERICA.

Mr. Thorne: asked the Minister without Portfolio whether the Government are taking steps to strengthen the British Purchasing Commission in the United States of America?

Mr. Greenwood: Yes, Sir. In consequence of the winding-up of the British Supply Board, Ottawa, certain members of the staff of the Board will be made available to the British Purchasing Commission. In addition, a number of experts on production, who are conversant with the various types of armament required, and include representatives of the War Office, are being sent out from this country.

Mr. Ammon: Is the Purchasing Commission strengthened sufficiently to secure that these people have powers to complete purchases without having to refer everything to London?

Mr. Greenwood: Most certainly.

Mr. Thorne: Do I understand from that answer that some of the Commissioners will have plenary powers?

Mr. Greenwood: The head of the British Purchasing Commission in America, Mr. Purvis, under authority from this country and under instructions given to him, has full power to complete purchases.

Mr. A. Edwards: Can the Minister say whether the Purchasing Commission still have to compete with various Government Departments and with private companies?

Mr. Greenwood: All our purchases are now being organised through the new North American Supply Committee.

FRENCH CREDITS (BRITISH BANKS).

Mr. Mender: asked the Chancellor of the Exchequer what steps have been taken to prevent French credits in British banks from becoming available to Germany or Italy through French channels?

The Chancellor of the Exchequer (Sir Kingsley Wood): Immediately on the capitulation of the French Government, banks were warned that no withdrawals from French accounts should be allowed, subject to certain well-defined exceptions where the money could not become available to Germany or Italy. The Trading with the Enemy Act applies to enemy-occupied territory as well as to enemy territory, and by a recent order it has been expressly applied to all Continental France and to Algeria, Tunis and the French Zone of Morocco.

Mr. Mender: Will my right hon. Friend give an assurance that French refugees to this country will be permitted to have access to their banking accounts?

Sir K. Wood: Arrangements are being made in that connection.

Oral Answers to Questions — NATIONAL FINANCE.

STERLING AND THE FRANC.

Mr. Mander: asked the Chancellor of the Exchequer what action it is proposed to take with reference to the relation between sterling and the franc in future?

Sir K. Wood: The French franc is not quoted or dealt in in this country, and the Trading with the Enemy Act and Orders issued thereunder do not allow any person to transmit orders to pay or receive francs in Metropolitan France or to make sterling payments for account of residents in that territory.

Mr. Mender: Is it the case, then, that sterling and the French franc are no longer linked together and that the French franc is now linked to the dollar?

Mr. Craven-Ellis: May we take it from what my right hon. Friend says that the tripartite agreement is at an end?

Sir K. Wood: That is one of the matters which may call for consideration.

CONSULTATIVE COUNCIL.

Mr. De la Bère: asked the Chancellor of the Exchequer whether, in connection with the recent appointment of a Consultative Council of eight members to advise him on special problems arising from war conditions, he will give the name of the chairman of this Consultative Council; and whether he is in a position to make a statement regarding the recommendations which have been made by the Council since its formation?

Sir K. Wood: I preside over meetings of the Council. Its discussions are confidential.

Mr. De la Bère: Will my right hon. Friend give an assurance that any recommendations which this Council may make will not be dallied with, but will be acted upon? Is he aware that he is fortunate in having men with brains on this Council, and that they can help him a lot if he will act upon their advice?

Sir K. Wood: I agree for once with my hon. Friend.

Mr. Stokes: As most of the people on the Council are orthodox and old-fashioned, will the right hon. Gentleman appoint somebody a little less orthodox?

AGRICULTURE (CREDIT FACILITIES).

Mr. De la Bère: asked the Chancellor of the Exchequer whether he will consider giving a Treasury guarantee through the banks, both as to principal and interest, to take over the whole of the sum of, approximately, £53,000,000, loaned by the clearing banks to the agriculturists of this country and any further advances required up to a maximum of £100,000,000, conditional on the banks not charging more than the Bank Rate interest of 2 per cent. on the sum involved and bearing in mind the precedent established by the Treasury guarantee as to principal and interest given by the Railway Agreement Act, 1935?

Sir K. Wood: No, Sir.

Mr. De la Bère: Is my right hon. Friend aware that this matter cannot be

lightly dismissed, and, indeed, cannot be dismissed at all? Does not this matter press for some settlement, and who are the mighty invisible forces which prevent action being taken? Why does my right hon. Friend acquiesce so tamely in all these things? On a point of Order. This matter has remained unattended to for five years, and in view of the unsatisfactory nature of the reply I shall raise the matter on the Adjournment. It is an absolute scandal and disgrace and brings the whole thing into contempt.

WAR SAVING.

Mr. Lipson: asked the Chancellor of the Exchequer whether he will consider a scheme by which customers in shops could, if they so desired, receive part or all of their small change in stamps of 3d. denomination, to be affixed to a war savings shopping card, to be exchanged at a post office for a War Savings Certificate when 60 stamps have been purchased?

Sir K. Wood: The authorities responsible for the War Savings Campaign are fully aware of the opportunities which shopping presents for the encouragement of saving and have recently inaugurated a scheme along the lines suggested by my hon. Friend, under which stores and shops may be registered as honorary official agents for the sale of National Savings Certificates and 6d. saving stamps. The scheme is being widely adopted, and I have no doubt my hon. Friend will agree that this will be sufficient at the present time.

Mr. Lipson: As my right hon. Friend's financial demands are so heavy, is he not aware that he must adopt more than one expedient to get his money and that this expedient will be a source of a considerable amount? Will he not ask the responsible body to give it further consideration?

Sir K. Wood: The National Savings Committee are taking this matter up with stores and shops, and I think it is as well to leave it there at the moment.

GOVERNMENT BORROWING (PUBLICATION).

Mr. Stokes: asked the Chancellor of the Exchequer his reasons for not publishing full details of the Government's weekly borrowing; and whether, in view of the public anxiety in this matter, he will reconsider his decision not to do so?

Sir K. Wood: For the present, it is my intention to continue the separate weekly publication of receipts from the Small Savings Campaign, the sale of National War Bonds and loans free of interest. This I regard as the best form of publication. There remains the floating debt, that is, Treasury bills, Ways and Means advances and borrowings from the banks under the scheme recently announced. To a large extent these items are interchangeable, and fluctuations in one item from week to week are unimportant and apt to be misleading. I am, however, aware of the public interest in the matter and intend to make the full figures available at monthly intervals.

Mr. Stokes: Does the Chancellor realise that as the new scheme means borrowing on the deposits of the depositors, the depositors have a right to know what he is doing?

Sir K. Wood: They will know.

Mr. Pethick-Lawrence: While appreciating the promise of the Chancellor to give a monthly statement, may I ask whether he realises that this change of information gives rise to a good deal of misgiving and that the British public and those interested in finance are quite capable of discounting any changes which might otherwise lead to misunderstanding? Cannot he have the matter reconsidered?

Sir K. Wood: I think that there has been some misapprehension, but my right hon. Friend will agree that that was because it was not realised that these figures would be published at regular intervals and that there is only an alteration from one week to one month.

Sir H. Williams: Is there any reason why the change was made?

Sir K. Wood: I referred to it in my answer.

Mr. Benson: If there is a misapprehension, is not that a reason for giving more information and not less?

Sir K. Wood: I think it will be found quite acceptable when it has been in practice.

TEXTILE EXPORTS TO UNITED STATES.

The following Question stood upon the Order Paper in the name of Mr. LEACH:

58. To ask the Chancellor of the Exchequer whether he is aware that certain textile exports to the United States of America do not need a licence and that this omission of control allows exporters the means to invest money in the United States of America against the national interests; and what steps he is proposing to put an end to this practice?

Mr. Leach: I put this Question down to the President of the Board of Trade, a much more appropriate authority.

Sir K. Wood: I am sorry about that. The system of export licensing is designed primarily to meet considerations of supply and of economic warfare and not to control the financial aspects of export transactions. The point raised by my hon. Friend is covered by the Defence (Finance) Regulations, under which the export of goods to the United States is allowed only upon conditions, the effect of which is that the export is paid for in dollars and that the dollars so realised accrue to the United Kingdom Exchange Control.

Mr. Leach: Is this particular gap now closed?

Sir K. Wood: I would not like to give an absolute assurance, but if my hon. Friend has any instances which he would like to bring before me, it would be helpful.

Mr. Tomlinson: Will the right hon. Gentleman look into the possibility of exporters exporting cloth to America and then following it up and collecting on the other side?

Sir K. Wood: I should be glad to look into any instances of which my hon. Friend knows, where that could be done.

AGRICULTURAL MORTGAGE CORPORATION, LIMITED.

Mr. De la Bère: asked the Chancellor of the Exchequer whether his attention has been drawn to the cash and investments of over £2,000,000 held by the Agricultural Mortgage Corporation, Limited, shown in their last balance-sheet, as distinct from the mortgage loans and advances to agriculturists; and whether he will now consider taking steps to reorganise the Agricultural Mortgage Corporation, Limited?

The Joint Parliamentary Secretary to the Ministry of Agriculture (Mr. T. Williams): I have been asked to reply. My right hon. Friend the Minister of Agriculture is aware that the Agricultural Mortgage Corporation has investments of about £2,000,000, but he does not regard this as a reason for seeking powers to reorganise the corporation.

Mr. De la Bère: Are the Government aware of the urgent necessity for administrative reform in this undertaking, and, indeed, in all undertakings dealing with agricultural credits; and is he not aware that the only benefit of this particular corporation is to debenture holders and that the small farmer derives no benefit because of the high rate of interest? It is no use giving that stereotyped form of answer.

Mr. Craven-Ellis: How is it that this corporation pays a dividend which it would not be able to pay but for the Government subsidy?

Mr. Williams: It may be that there is an unfortunate history about the £2,000,000 investment referred to by my hon. Friend the Member for Evesham (Mr. De la Bère), but Section 32 of the 1939 Agricultural Development Act was designed to deal with the point raised by my hon. Friend the Member for Southampton (Mr. Craven-Ellis).

Mr. Craven-Ellis: Will the Government give instructions that dividends must not be paid out of Government subsidies?

Mr. Williams: The Government of 1939 decided not only that they should allow dividends to be paid to debenture holders, but guaranteed £60,000 per annum for 20 years for maintaining those dividends. I presume that my hon. Friend would support that.

Sir Irving Albery: Is not my hon. Friend making a mistake in referring to dividends to shareholders? Does he not mean interest?

Mr. Williams: As regards any difference, I am subject to my hon. Friend's correction.

Mr. de Rothschild: As my hon. Friend has now changed his views, will he now use his influence with the Minister to have the policy reversed?

Mr. Williams: It is not a fact that I took another view on this subject in 1939. I stand in 1940 where I stood then.

Mr. De la Bère: Would it be possible to get a move on? Never mind where the hon. Gentleman stands now.

GOVERNMENT DEPARTMENTS (CONSCIENTIOUS OBJECTORS).

Mr. Denville: asked the Financial Secretary to the Treasury whether he has considered a resolution passed by the Ex-Service Civil Servants' Association objecting to conscientious objectors in Government Departments; and what reply he has returned thereto?

The Financial Secretary to the Treasury (Captain Crookshank): I have not received direct representations from the association in question. The National Service (Armed Forces) Act, t939, provides that the appropriate tribunal may direct that a conscientious objector shall undertake work of a civil character. In the case of a civil servant the employing Department takes no action unless the conscientious objector refuses to perform duties which can appropriately be required of him, and in this event he is dismissed.

Mr. Erskine Hill: asked the Financial Secretary to the Treasury whether civil servants who have registered as conscientious objectors, and have been instructed by a tribunal to remain in their Civil Service employment, will obtain any advantage over their colleagues who are serving in the Forces?

Captain Crookshank: No, Sir. Such persons will not be permitted to secure any advantage over their colleagues serving in the Forces, and will in consequence, for the war period, be barred from consideration for promotion.

Mr. Erskine Hill: While thanking my right hon. and gallant Friend for that reply, may I ask whether he means that in regard both to pay and promotion those who are performing honourable service with the Forces of the Crown will be in at least as good a position as anybody who is a conscientious objector and continues in the Civil Service?

Captain Crookshank: I think my hon. and learned Friend has put the proposition


the other way round. What I said was that those who are working in the Civil Service as conscientious objectors will not get any advantage as a result of that as compared with those who are at the war.

Sir T. Moore: Does that mean that a Civil Service conscientious objector will receive exactly the same pay as civil servants who are serving in the Armed Forces of the Crown?

Captain Crookshank: It depends upon the work they are doing. If my hon. and gallant Friend will study the reply which I have given, I think he will find the answer.

Mr. Levy: Are we to understand that no advantage of any kind or description will be obtained by conscientious objectors over those who have gone to fight?

Captain Crookshank: That is what I said.

Oral Answers to Questions — ARMED FORCES.

POSTAGE FACILITIES.

Mr. James Hall: asked the Financial Secretary to the Treasury whether he will consider making arrangements to permit British troops to send letters marked "On active service, soldier's letter," at the old postage rate of I½d.?

Captain Crookshank: I would refer the hon. Member to the reply which my right hon. Friend gave to my hon. and gallant Friend the Member for Coventry (Captain Strickland) on 18th June last.

Mr. Turton: Would it not be possible to have some system like the green envelope system, allowing each man one letter a week either free or at a charge of I½d.?

Captain Crookshank: Perhaps the hon. Gentleman will look at the answer to which I have referred him.

Mr. J. Hall: If the right hon. and gallant Gentleman said that a cheap postal rate for soldiers is an impossibility, will he agree to the issue of field cards to help these men out?

Captain Crookshank: That is not the question I was asked. The question was asking that letters should be sent for I½d. and was not asking for field cards.

Mr. Sorensen: Are there any means of assisting soldiers in this matter of postage?

CIGARETTES AND TOBACCO (PRICES).

Mr. J. Hall: asked the Financial Secretary to the Treasury whether he will take steps to allow men serving in the Army to purchase cigarettes in the Navy, Army and Air Force Institutes canteens at prices comparable to those available to members of the Royal Navy?

Captain Crookshank: The privileges of the Royal Navy to which the hon. Member refers are of long standing, and are confined to naval personnel serving in His Majesty's sea-going ships in commission. My right hon. Friend has given careful and sympathetic consideration to the various proposals made by hon. Members that, by one means or another, personnel in the Armed Forces in this country might be enabled to purchase cigarettes or tobacco at a price free of duty, but for reasons explained in answers to previous Questions as well as during the passage of the Finance Bill it is not possible to agree to such proposals.

Mr. Hall: Will the right hon. and gallant Gentleman take into consideration the small amount of money left to soldiers after making allotments? Surely with the small sum they have left the present prices of tobacco and cigarettes are a real hardship to them and ought not something to be done to lessen the hardship?

Captain Crookshank: All those considerations have been looked into by my right hon. Friend.

Mr. Shinwell: Will the right hon. and gallant Gentleman inquire into the secret reserves at the disposal of N.A.A.F.I., so that they may be utilised for providing men in the Services with tobacco and cigarettes at cost price plus the expense?

Mr. Denville: Why make profits out of our soldiers?

Captain Crookshank: I think the hon. Member for Seaham (Mr. Shinwell) made that suggestion in a public speech, and no doubt as a result of that it has also been considered, but I am not responsible for the reserves or even for the administration of the N.A.A.F.I.

Mr. Shinwell: Does the right hon. and gallant Gentleman appreciate that no Government Department appears to be responsible for that organisation, and yet it seems to be the only means of enabling the men in the Services to obtain cigarettes and tobacco at a lower cost?

Captain Crookshank: I cannot help that. I am not responsible.

DETENTION OF A MEMBER.

Sir Ernest Bennett: asked the Home Secretary whether he can now state the result of the recent appeal by the hon. and gallant Member for Midlothian and Peebles (Captain Ramsay) against his detention?

Mr. Peake: I understand that the Advisory Committee will be submitting a report at an early date, and when it is received my right hon. Friend will consider it without delay.

Mr. Maxton: That does not answer the Question whether this House will have a report from the right hon. Gentleman.

Mr. Peake: That was not the Question on the Order Paper as I read it.

Mr. Stokes: Will the hon. Gentleman say what is meant by "an early date"? This has been going on for a long time.

Mr. Peake: We hope to receive the report of the Advisory Committee within the next two days, and my right hon. Friend will be in a position, I hope, to make a statement some time during next week.

BUSINESS OF THE HOUSE (SUPPLEMENTARY BUDGET).

Mr. Lees-Smith: May I ask the Lord Privy Seal when the Chancellor of the Exchequer will open his Supplementary Budget?

Mr. Attlee: My right hon. Friend will open his Supplementary Budget on Tuesday next.

Sir P. Harris: How many days are we to have to discuss the Budget? Will there be the usual stages?

Mr. Lewis: Will the Purchase Tax Bill now before the House be dropped?

Mr. Attlee: I would ask the hon. Gentleman to await the Budget Statement.

Sir P. Harris: May I have a reply? Will there be the usual opportunities to discuss the Budget in its various stages?

Mr. Attlee: The right hon. Gentleman had better raise that question through the usual channels.

Orders of the Day — EMERGENCY POWERS (DEFENCE) (No. 2) BILL.

Order for Second Reading read.

3.58 p.m.

The Secretary of State for the Home Department (Sir John Anderson): ; I beg to move, "That the Bill be now read a Second time."
The purpose of this Bill has, I think, been misunderstood in certain quarters. It is thought by some that the object of the Government is to establish courts-martial, or some other form of military tribunal, for the punishment of civil offenders. The exact opposite is the case. The object which the Government have in view in promoting the Bill is to avoid the necessity for establishing anything in the nature of military courts. The Government have worked out a plan which I shall outline to the House, but I must first explain why the Bill is needed at all, in view of the fact, which I have just stated, that all that the Government have in mind is the establishment of civil courts of a somewhat special character.
The House may recall that, in the Emergency Powers (Defence) Act, 1939, in Section 1 (5), words were included specially against making provision by regulation for the trial by courts-martial of persons not subject to military law. Those restrictive words, confined as they are to courts-martial, might not, indeed, have been an obstacle to doing what the Government now propose, but as we felt that the inclusion of such restrictive words in the Act of 1939 might be held to imply an intention to rely solely on the normal machinery of justice, we thought it right to come to Parliament with proposals for legislation and to explain, frankly and in some detail, what it is that we propose.
We do not contemplate any general displacement of the ordinary machinery of justice. The special courts that we have in mind will operate only where, owing to military developments, the ordinary machinery of justice can no longer meet, or fully meet, the requirements of the case and they will operate only so long as the emergency continues. The sort of case that we have in mind is where, after an attempted invasion by sea or air, or possibly after an exceptionally severe air

attack, a state of things prevails in which, as part of the process of re-establishing normal conditions, it is necessary to have courts in operation which can deal with grave offences far more speedily than would be possible under the normal processes of justice. For this purpose, if the case should arise, we need special courts and we want simplified procedure. I shall explain in a moment the constitution of the courts we have in mind, and the main changes of procedure that we propose. But I must first make it clear that while all the machinery will be got ready and the persons who would take part in the work of these special courts, whether in a judicial capacity or as subordinate staff, will be designated in advance, the courts will actually operate only where a state of grave emergency has been declared by the appropriate authority and only for so long as that state of emergency continues.

Sir Richard Acland: Will 
the names of the people who are to act he published?

Sir J, Anderson: That is a point which might be considered. The plan which we have in mind is a plan which has been worked out in conjunction with the military authorities. There is no question here of any difference of opinion between soldiers and civilians or of any conflict of rival theories. This is something on which there has been general agreement and it is important that that should be made clear.

Mr. Beechman: Between whom has there been general agreement?

Sir J. Anderson: Between the military and the civil authorities.

Mr. Shinwell: The Home Office?

Sir J. Anderson: All those who have been collaborating in this matter. The point I want to make clear is that this is not an attempt to override something that the military authorities would prefer. This represents the agreed view of the arrangements which could best be made, to deal with the state of grave emergency which may arise, and against which it is only prudent to prepare in advance, and in regard to which, if we do not make the sort of preparation which I am now about to outline, we may find ourselves left, of necessity, with an alternative which would be far less acceptable to all concerned.
Here then is the plan. It is proposed that suitable men of judicial rank or qualified to exercise high judicial office should be selected by the Lord Chancellor and assigned to act as Presidents of special War Zone Courts if and when an area is declared to be a war zone area. These Presidents will be empowered to hold their courts in such places in the areas so declared as will be most convenient. In settling where the courts will sit they will act in consultation with the military commander. They will be empowered to deal with offences of all kinds but it is contemplated that, in practice, they will deal only with the more serious offences which are of importance from the military point of view. In any such area there will still, no doubt, be justices of the peace available to deal with minor offences, but as regards major offences there must, in the view of the Government, be some swift and simple method of trial available in the circumstances which we envisage.
At present, under the ordinary peacetime procedure, offenders charged with serious offences must first be brought before examining justices before they can be committed for trial at courts of assize or quarter sessions. In emergency conditions, such as might result from invasion, this slow and elaborate procedure would not be practicable. It is accordingly proposed, when these special War Zone Courts have been set up, to provide for the elimination in any area declared to be a war zone, of the procedure of committal for trial and to enable offenders to be brought immediately before the special courts.
It is proposed, as I have said, that the special courts shall be of a civilian character; that the ordinary rules of evidence shall apply and that offenders charged before them shall have legal representation if they wish to have, and are able to obtain, such representation. Moreover, if the offender has not previously been before an examining justice and if, consequently, there are no depositions, there must be some simple rules of procedure providing that any person charged with an offence shall be given before his trial full information as to the charge and the nature of the evidence to be given against him, and afforded a reasonable opportunity of preparing his defence. All those

matters will be provided for by special rules.

Mr. Hore-Belisha: As this is an entirely new judicial procedure with many safeguards for the subject, why does not the right hon. Gentleman introduce a Bill containing those safeguards?

Mr. Glenvil Hall: Is the right hon. Gentleman sure that he is dealing with the right Bill?

Sir J. Anderson: I do not understand the point of the last observation. With regard to the remark which has fallen from my right hon. Friend the Member for Devonport (Mr. Hore-Belisha), I have explained to the House that this system of special courts which we contemplate could, probably, have been set up by regulation, as the law now stands, but we thought it better to come to the House with a Bill so that the House might know what is proposed. It is for the House to pass judgment.

Mr. Hore-Belisha: But why is not all that in the Bill?

Sir J. Anderson: Because that will be dealt with in the regulations. There will be a great deal of matter in the regulations which it is not convenient or practicable to bring before the House in a Bill.

Hon. Members: Why not?

Mr. Kingsley Griffith: Is it not the case that the right hon. Gentleman is now putting before us the real essence of what we have to discuss? Yet none of that is in the Bill. If this Bill is passed, the right hon. Gentleman can do what he has just indicated, but he can also do a great variety of other things.

Sir J. Anderson: Really, I suggest that the House cannot, fairly, expect to have it both ways. I have said that this matter could in all probability have been dealt with without bringing a Bill before the House at all, but it was thought desirable to bring this Bill before the House for the reasons which I have explained. It seemed only courteous and proper that the House should hale, in outline, the scheme which we contemplate putting into the regulations. The regulations when they are made will come before the House and the House will have an opportunity of debating them. [HON. MEMBERS: "But


not amending them."] May I point out that there is an element of very great urgency in this. None of us knows when the situation for which this scheme is designed to provide may arise. None of us knows exactly what the conditions may be which will have to be provided for, and in my view there is a great deal to be said for preserving the element of flexibility, which is secured by dealing with this matter by regulation. It seems to me as an observer that one of the conspicuous features of this war has been that hardly anything has turned out exactly as we expected. At any rate, as far as the House is concerned, surely they will not find fault with me for dealing rather more fully with the subject-matter of the regulations than might have been thought absolutely necessary. I do not propose to detain the House for any length of time hut it did seem right that the House should have before it the general scheme of the regulations which we have in mind.

Mr. Maxton: In view of what the right hon. Gentleman has said, and the fact that there is grave misgiving about this proposal, will he, instead of having the whole discussion of the Bill completed to-day, make arrangements so that when we have heard a statement, in addition to what we have seen printed, we may have an opportunity of amending the Bill in Committee?

Mr. Shinwell: The regulations when they are presented must be based on the main provisions of the Bill. The right hon. Gentleman in dealing with the regulations referred to the establishment of civil courts, but there is no reference in the Bill to civil courts.

Sir J. Anderson: There need not be any reference in the Bill to civil courts in order that provision may be made in the regulations for civil courts. The Bill does not say that there are not to be civil courts.

Mr. Logan: In view of the extraordinary powers that are being taken, could not the right hon. Gentleman take the House into his confidence at once and let us know whether it is considered that these emergency powers are absolutely necessary and wise at the present time; and whether this will mean the abolition of civil courts and the setting up of military courts to meet an emergency?

Sir J. Anderson: I was trying to explain, if the hon. Gentleman had followed me, that the purpose of the proposal is to enable any situation that may arise to be dealt with, as far as is humanly possible, under the machinery and procedure appropriate to a civilian court instead of having to fall back, as we undoubtedly could and might have to fall back, on courts of a military character. With regard to the point made by the hon. Member for Bridgeton (Mr. Maxton), I suggest, with great respect for his experience of Parliamentary procedure, that it would he better to reserve a decision on that matter, at least until the opening speech has been made.
As I was saying, the special courts which we propose to set up will differ from the ordinary courts of assize or quarter sessions in two important respects. First, there will be no jury, and secondly there will be no appeal from the decision of the court. The court will be empowered to impose any sentence authorised by law, including the death sentence for any offence for which the law authorises capital punishment. If the death sentence is imposed it is proposed that the President shall have power to respite that sentence, if he thinks there are circumstances which make it right to delay the execution and to enable the question of commutation by means of the Prerogative to be considered by the Home Secretary. There will, however, be no right of appeal to the Court of Criminal Appeal.
These special courts will, as I have said, have power to deal with all kinds of offences, but they will also have power to refer to other courts any case which it is not necessary or appropriate to deal with under this special procedure. For instance, if a case of minor importance is brought before them, they will be empowered to refer that case to the local justices. Again, if a case is not of a kind which it is necessary to deal with under this special procedure the War Zone Court will be empowered to refer such a case to any court of assize or quarter sessions sitting in a part of the country which is outside a war zone. Moreover, if a case which is brought before the justices appears to be more appropriate for a War Zone Court, the War Zone Court will be empowered to take the case


out of the hands of the justices and to try it.
The question whether the President of the court shall sit alone has been carefully considered. The Lord Chancellor has been in consultation on the subject with some of those who are expected to exercise this responsibility if the need arises. As a result, it has been thought that it would be advantageous to associate with the President of the court two justices who will have knowledge of local circumstances and will be able to assist him with their advice.

Mr. Pickthorn: When you say "justices," do you mean justices of the peace?

Sir J. Anderson: Yes.

Mr. Gordon Macdonald: To be appointed by whom?

Sir J. Anderson: That is a matter which will be covered by the regulations. They may be selected from a panel or appointed by the Lord Chancellor.

Mr. Shinwell: By Lord Simon?

Sir J. Anderson: The President will pay due regard to the opinion of the two justices, but they will not be in a position to over-ride his judgment as regards either conviction or sentence. This, in outline, is the plan which we have in mind, and, while I do not bind myself absolutely to details—

Mr. Logan: Will the right hon. Gentleman allow me—

Mr. Speaker: It would be better if the hon. Member allowed the right hon. Gentleman to continue.

Mr. Logan: Seeing that this is not contained in the Bill, it is quite impossible to retain all this in one's head. It is necessary to understand what we are doing, and my intervention concerns only these words. It is a very important matter.

Mr. Speaker: Surely it would be better if the Minister were allowed to finish his speech.

Mr. A. Bevan: On a point of Order. The right hon. Gentleman is not referring to the Bill but to the regulations which are not before the House. He is telling us what he intends to do

when the Bill has gone through the House, and I submit that it is hard lines for the House to consider this Bill when the right hon. Gentleman has not explained what are the intentions of the Government contained in the regulations.

Mr. Speaker: Hon. Members will have their opportunities to make their speeches.

Mr. Shinwell: On a point of Order. Is it competent for the House to discuss what are in effect the regulations which are not presented to the House? Is not the appropriate time to consider the regulations, or even to explain them or to adopt them, when they are first presented to the House?

Mr. Speaker: I do not in any way wish to prevent discussion, but I would ask hon. Members, when a Minister makes his speech explaining the Bill, to allow him to do so without interruption.

Sir J. Anderson: I quite appreciate the concern of hon. Members, and I might say that these are matters which have caused me considerable concern. But, speaking for myself, I should feel in a far better position to appreciate the merits of a Bill which is inevitably not self-explanatory if I knew the action which it was proposed to take under the Bill; and I thought I was assisting hon. Members, and I am sure I have been assisting some of them, by setting out in quite general terms and as briefly as I can the general plan which the Government have in mind. I think there is some unreality in a number of the comments which have been made. I wonder whether hon. Members really appreciate what it is that we are trying to do, and what the situation is that we are really trying to face. What would be the position if no such provision as this were made—a military regime lasting for so long as military necessity justified. We are trying to secure by these provisions that that inevitable military rule, which must supervene in the vital interests of this country in certain circumstances, shall be replaced, as soon as may be, not by the normal processes of civilian justice with which we are all familiar, but by something which, though more summary, is at least based upon our normal civilian procedure. That is the purpose, and the sole purpose, of this plan. I told the House that the military authorities themselves were


in full agreement with those who advised His Majesty's Government on these matters in thinking that a plan on these lines was desirable if it could be carried through with the authority of Parliament.
Now I hope I may be allowed to proceed. As I have already said, these courts will be empowered to pass such sentences as are authorised by law, but it may be that in the situation in which these courts will be operating some further strengthening of the ordinary law will be required. This does not arise directly out of the Bill, but I mention it so that the House may review the problem as a whole and may have as clear a picture as possible of the sort of emergency of which we are thinking. If, for example, extensive looting should take place or if there should be apprehension of extensive looting in a war zone area, it would obviously be necessary to have power to inflict the most drastic penalties. It is proposed, not under this Bill but by a Defence Regulation, that in such a situation of acute emergency as is contemplated the courts should be empowered to impose the death penalty for looting. The death penalty will not, of course, be the only penalty. The court would be empowered, if it thought fit, to impose some less serious penalty. It is proposed —and I am being frank with the House —to provide by Defence Regulations, again not under this Bill, drastic penalties, including the death penalty if necessary, for the offence known in military language as "forcing a safeguard," that is to say, forcing one's way past a military picket or overpowering a sentry. There may arise cases in which it is necessary to close certain roads or certain places to civilians, and a grave view must be taken if any persons attempt to disregard these restrictions and to force their way past military guards.
It is possible that further Defence Regulations may have to be made imposing special restrictions on civilians and imposing penalties for a breach of those restrictions; but, apart from such special cases as I have already mentioned, it is believed that the existing law as supplemented by emergency legislation will be sufficient for dealing with all such offences. As the House knows, the ordinary criminal law has been supplemented by the Treachery Act, which imposes the death penalty for acts of espionage or sabotage committed with

intent to assist the enemy, and by numerous provisions in the Defence Regulations relating to signalling, communicating with enemy agents, spreading false reports and so on.
I have already referred to the question of military courts, which some hon. Members seem to fear we may be trying to introduce by a side wind. I have assured the House, and I am sure the House will accept my assurance, that the reverse is our intention, but there might arise a situation of such extreme gravity and of such a nature that, as I have already said for the time being the military authorities must be supreme. They must be responsible for all executive action in an area which is actually the scene of military operations. They might in such circumstances set up what has sometimes been described, I believe, as a system of military courts under what again I believe is sometimes described as martial law. Martial law in this country is a phrase of very indefinite import, but the system of military rule that I have been describing, which might include something which might reasonably be described as a system of military courts, is contemplated by the Common Law of this country in cases of grave danger when the safety of the people is the supreme test of action. Some people there are, I know, who think that instead of taking the novel, and as it appears somewhat controversial, course which the Government propose to adopt here, we should have been content to rely on the powers inherent in the military authorities for dealing with cases of emergency, but there are solid, substantial reasons against this. In the first place, everyone, I am sure, will agree that the sooner you can get back to the processes of ordinary civilian law, in the sense in which I use the term, so much the better. It is also the fact that in the circumstances that we have to envisage, the military authorities will have their hands very full. They do not want to be charged, in addition to their primary responsibilities of the greatest gravity, with the business of setting up some system of military tribunals to deal with civilians. Finally, there is this most important consideration, that in an emergency the action taken by the military authorities whatever it may be, is always subject to the test of actual necessity. It is, therefore, subject, except in so far as


it may be action of an irrevocable nature, to subsequent interference in one way or another. It is surely very much better that so far as possible the action which is taken should be taken under a procedure settled in advance, approved or accepted by Parliament, and in accordance with Regulations which have been prepared with due care and submitted to the opinion of the two Houses of Parliament. For these reasons the Government unhesitatingly reject any suggestion that, in lieu of adopting the procedure which I have been outlining, we should rely on the powers which are inherent in the military authorities in times of grave military emergency.
I have only a few more words to say. Detailed provisions for the establishment of these special courts will be made by defence regulations which are now being prepared. These regulations will be laid before Parliament in the ordinary way. Hon. Members will then have an opportunity of examining the scheme in detail and the House can, if it so desires, discuss the regulations in Debate. Meanwhile, I hope that the explanation which I have given will prove to be a sufficient indication of the emergency procedure which it is proposed to adopt. There is, I repeat, no intention of setting up these special courts, and bringing this emergency procedure into operation, until there arises a critical situation which calls for this special means of dealing swiftly with offences by civilians, and it may be that it will not be found necessary to put this scheme into operation at all, or at any rate not on any extensive scale. But in these days, as I have said, we must be prepared for all contingencies. It would not be possible to leave such a system as this to be improvised at the last moment when the need for it arose. The Government have, therefore, thought it right that all preparations should be made so that the scheme could be put into force at a moment's notice, if need arose; and I trust that the House will be ready to pass this Bill through all its stages this afternoon, so that we may press forward with the completion of the scheme without delay.

Captain Gluckstein: Could my right hon. Friend explain the words:
Where the military situation is such as to require the institution of special courts"?

Who is to be the judge of that, the Home Secretary or the military authorities?

Sir J. Anderson: In regard to these special courts, which are to be civilian courts, the decision will be taken by a civil authority, presumably the Home Secretary; but it will be taken after a review of all the circumstances, and of course after consideration of military opinion. I ought perhaps, with permission, to say that I have spoken throughout as if this scheme were confined to England and Wales. I have done so for reasons of convenience; but, obviously, it is applicable to the whole of the United Kingdom. My right hon. Friend the Secretary for Scotland and the Scottish law officers will have certain responsibilities in connection with its administration in Scotland.

Mr. Bevan: Will the Home Secretary explain this point? At the beginning of his speech, he said that there was an opinion in Government circles that the Government had the powers to do what they wanted to do without this Bill. How does he account for the fact that the Bill expressly mentions that the Government have not the powers?

Sir J. Anderson: I think I made the position clear, as the hon. Member will find if he reads the OFFICIAL REPORT to-morrow.

Sir R. Acland: Are we to understand, from the Home Secretary's speech, that these powers are to be limited only to those parts of the country where there is an invasion or an air raid?

Sir J. Anderson: I apologise if I did not make that perfectly plain. We contemplate that these courts are to function within the narrowest limits, consistent with the practical facts of the case.

4.35 p.m.

Mr. Lees-Smith: The right hon. Gentleman has given a careful explanation of the intentions of the Bill, though, I am bound to say, not of its actual provisions. As to the broad intentions of the Bill, there is nothing to which the House would take any great objection. The Minister for Home Security explained the position; I cannot myself explain it in legal language, but I understand the broad situation as he put it to the House, that if no such Bill were introduced and there were an in


vasion and the ordinary courts could not function, there would have to be some courts to deal with looting and so on, and those courts would have to be military courts. I am told that the position, without this Bill, would be that in such circumstances the military judges would have to take their chance of getting an indemnity afterwards. The right hon. Gentleman has explained that, in order to avoid that situation, he proposes to establish civil courts with civil judges, who, I gather, would be attached to military headquarters and would move about with the Forces while they administered the civil code. That, I understand, is the intention of the Bill, but the difficulty is that there is nothing of all this in the Bill.
It is evident from the Minister's speech that the whole content of this Bill is in the regulations; and the House has not seen the regulations. Half an hour ago the House had not the slightest idea of what the regulations contained. The House is really in the same position as though a Bill had been introduced without notice. The real content of the Bill has been explained to us verbally, but we had no notice of it before. I do not think the House would be doing right to pass this Bill through all its stages until we have had an opportunity of looking at these regulations, and of forming our opinion upon them. On a previous occasion there was a difficulty of this sort, which was solved by a number of Members from all parties looking at the regulations, with the Government, and afterwards recommending acceptance of them to the House. The regulations then went through without much difficulty. In the present circumstances the House, as it is the business of Members as a whole to look after the liberties of the subject, cannot allow a Bill to pass without any more knowledge of it than was given in the speech of the right hon. Gentlemen, which we could not thoroughly apprehend, with all its significance, while he happened to be on his feet.
Could not a great deal of the governing safeguards which were mentioned in his speech be embodied in the Bill? I have looked at the Bill, and I have thought of one or two fairly simple Amendments which would provide these safeguards. At present the Bill would allow martial law, without any qualification, to be imposed on the civil population to

morrow. I would suggest that wherever the special courts are mentioned, the term should be altered to "special civil courts." I have thought of another Amendment, to meet the point which has occurred to the hon. and gallant Member for East Nottingham (Captain Gluckstein). The phrase
where the military situation is such as to require the institution of special courts 
could be amended so that the power which is given could be confined more strictly to a situation where the ordinary courts could not carry on their normal functions. I think the Government will have to consider Amendments of that kind if they wish the Bill to go easily through the House. I foresee that the most important safeguard that we shall have to introduce arises from the fact that these courts will be carrying through a procedure which must be very drastic, and which must be practically immediate. The ordinary court-martial procedure allows a fairly lengthy process so that the accused person may know what he is accused of and can prepare his defence beforehand, but these regulations must lay down very special precautions. The accused person must know what he is charged with, and what will be the case against him before he goes to court. If he cannot always be defended by a barrister, there should be arrangements so that he could have some sort of "prisoner's friend." I presume that the ordinary rule of civil evidence will apply, and, as these will be all criminal cases, which would normally be cases for a jury, I hope that the judge will not sit by himself, but that he will have civilian assessors, or whatever they are called, who will give the civilian point of view —which will by no means be any the less severe. Have all the new offences been stated? Looting and forcing the barriers across the roads have been stated as new offences for the death penalty. Are there any others?

Sir J. Anderson: No, Sir.

Mr. Lees-Smith: I am glad of that. But that part of the right hon. Gentleman's speech shows the necessity for some further consideration of this matter.

Sir J. Anderson: I explained that the creation of new offences is not really a matter for this Bill. New offences, if they are created, will be created under the Defence Regulations as they stand.

Mr. Lees-Smith: New offences are a part of the Bill, and it is a very serious thing to accept the creation of new offences involving a death penalty without any further discussion. There is another matter which has not been cleared up. Will these courts try civilians only, or soldiers as well, or will there be civil and military courts side by side?

Sir J. Anderson: I think it is made clear in the Bill that persons who are subject to military law may be tried by these courts. That is a matter for the military authorities; they may hand people over if they like.

Mr. Lees-Smith: It would not be competent for us to carry on a discussion of the right hon. Gentleman's speech, because of our lack of apprehension of what is intended, but the broad intention of this Bill is something that we support, and particularly the substitution of civil for military courts wherever it can be done. Apart from everything else, it is a bad thing that military officers should be acting as judges instead of fighting the enemy. But the Bill is far too vague at present for the House to accept. I suggest that the Government should not proceed with it further until the House has had an opportunity of considering the regulations.

4.43 p.m.

Mr. Kingsley Griffith: The right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) claimed that the Bill would secure the substitution of civil courts for military courts. I do not know where he got that idea. He cannot have got it from the Bill, but he may have got it from the right hon. Gentleman's explanation. Our whole difficulty is that the Bill and the right hon. Gentleman's speech are so different. From the Bill, the only indication one can get is that it is the intention of the Government to substitute military for civil courts. Line 4 of the Preamble says that
the said powers did not enable provision to be made for the trial by courts-martial of persons not being subject to the Naval Discipline Act, to Military law, or to the Air Force Act,
and line 12 explains that the powers are now to be taken
to secure that provision for the trial of such persons by special courts may he made.

That is to say, that where the old law prevents trial by court-martial the Bill will provide for trial by the special courts. The only conceivable reasonable explanation of that is that they are going to have courts-martial in spite of the old Act, if they like. The right hon. Gentleman now says to us—and we like to hear all his explanations—exactly the kind of civilian courts they are to be. H says they are to be special courts, and he tells us all sorts of nice things about them, or at least some are nice and some are not There is to be no appeal. That is not at all so good for the civilian, but the rules of evidence are to be preserved and legal representation is to be afforded. But there is nothing about that in the Bill. What are we passing to-day? Are we dealing with this Bill or with the right hon. Gentleman's speech? It is all very well for anybody to come before this House and say, "I have a Bill which entitles me to cut off your head, but I can assure you that I am only going to cut your toe nails." That is what his speech amounts to. He says, "I am taking all these enormous powers, but I am not going to use them, so you need not worry." That is all evidence that this Bill has not been thought out.
I am well aware, and nobody need tell me, of the enormous emergency under which this country is labouring at the moment, when the circumstances in which the powers of this Bill might have to be put into operation may come upon us this very night, but the Government have been aware of the possibility of this situation for weeks. If they wanted to prepare us for the emergency, they might have done so perhaps by a preparatory announcement by the Minister, in answer to a question in this House, that certain legislation was in contemplation, and we might have had the real Bill by now about which we have heard only in the last half hour or so.
If we pass this Bill to-night, we shall give to the right hon. Gentleman power not only to do the things which he has told us he wants to do, but to do all the things that are in this Bill and which someone might think it necessary to do. He has tried to frighten us with the idea that the alternative to this Bill is military rule, but all kinds of military rule are possible under the Bill itself. There is no reason why the special courts are not to be military courts, only the right hon. Gentleman has said that at the present


moment he does not think that they will be. That does not give us very much safeguard. We know definitely, when we turn to Sub-section (2) of Clause 1, that the regulaions may provide
for the proceedings of such courts being subject to no review or to such review as may be so provided for.
"Such review as may be so provided for" must mean less review than is possible under the existing law, otherwise why put it in the Bill? The full procedure of the Court of Criminal Appeal might be undesirable or impossible in this case, but a great deal more is ruled out than that where arrests have been made under justifying circumstances of this sort. Such safeguards as there might be are left out of the paragraph of this Bill that we are passing to-night, if we do pass it. They are left entirely to our confidence in the discrimination of the right hon. Gentleman under the regulations. Having had the opportunity of consulting the right hon. Gentleman on previous regulations, I would have very considerable confidence at all times in his discrimination in the use of any regulations, but, after all, we are a responsible body, and we are asked to pass a Bill now which, unfortunately, has not been preceded by the kind of consultation which took place on previous occasions, and which would have been most desirable on this occasion. We have no alternative but to deal with the Bill as it stands. Had the right hon. Gentleman said he would give us a chance and see whether he could not alter it a bit, we would have had a second thought. Once we pass this Bill it will be enforced, and action will be taken upon it before we have had any chance of considering any kind of revision. Therefore, I am extremely suspicious of the situation that we are now creating.
I am not imputing any sinister motives to the right hon. Gentleman. I have had the privilege of working with him, and I believe that as far as he is concerned the regulations will be of the best kind and that the Bill will be interpreted as liberally as possible, but I do not think that we ought to leave it quite like that. There ought to be something more definite, and something ought to be put into the Bill to remove the dangers which many of us consider are likely. We have been told to rule out courts-martial. They are to be civilian courts,

but surely the essence of our Constitution is the separation of the powers of the Judiciary from the Executive. In the civilian courts, whether courts-martial or not, whether it is a colonel or a major so-and-so, or whether it is some experienced magistrate, we have nothing of that safeguard, but they will be much more under the power of the Executive than the ordinary judicial processes of this land.
There is nothing in this Bill to prevent courts-martial in their ordinary sense from being set up under the Bill. I have had some experience of courts-martial. I have served under a great many field generals, and at one time while convalescent I acted as judge. I have the greatest respect for the average officer who sits on courts-martial. These officers always intend to do justice, but they have not the necessary training, and they tend to disregard the rules of evidence. It may be said that these are to be civil courts. Are we going to be secured against one of the greatest evils that I have seen in the administration of courts-martial, and that is, the instruction from above from the military authorities? I have seen this operating in scores of courts, where it has been said, "This offence "—let us say loitering or anything else—"is particularly prevalent in this area, and the commanding-officer desires that it should be stamped out at all costs." I have known that sort of thing happen again and again. The intention of that is merely that the offence should be considered seriously, but the effect of it is to make the court consider that there must be a conviction in order to make an example, and it has an effect upon the actual process of the trial.
These are not imaginary cases. As soon as you set up a special system of courts divorced from the ordinary processes of law and not bound necessarily by the ordinary rules of evidence, and subject to instructions from the executive, I fear that we may get a deterioration of the administration of justice which might act very prejudicially. I believe that, with due 
consultation and with a Bill drawn more in accordance with the speech that the right hon. Gentleman has made to-night, we might produce a proposal which would secure the safety of our country without endangering the liberty of, and justice to, the individual.

4.55 P.m.

Mr. Hore-Belisha: I rise to reinforce the appeal that has been made to my right hon. Friend by the two previous speakers. It is by now quite plain that this Bill does not carry out the intentions of my right hon. Friend. He has produced it as a Measure to protect the civilian from a harsh military procedure. In fact, however, the Bill does exactly the reverse and is expressed to be a Measure to subject the civilian to martial law. There is nothing in the speech of my right hon. Friend which justifies such a purpose. Indeed, the whole intention of his speech was to reject the purpose of this Bill. The Bill makes provision—and it is a strange sequence of thought—for the apprehension and punishment of offenders, and then subsequently for their trial. If the House will look at Sub-section (2) of Clause 1, I think they will see that it illustrates the spirit in which the Measure has been drafted, for "trial" is mentioned as an afterthought after the apprehension and punishment. When we are dealing with matters of justice we should act with the greatest circumspection. First of all, because we are fighting for our system of justice as against a much harsher system. Not only must we be just, but we must seem to be just. If this Measure is allowed to go through the House of Commons in its present form, you will be handing over to the Executive the most extreme powers without any of the safeguards mentioned by my right hon. Friend.
Nobody would withhold from the Government in this time all the powers that are necessary for the efficient conduct of the war, and indeed, without any protest and within a very few minutes of time, the House passed the principal Act to which this is an Amendment. That shows the spirit of good will in which the House of Commons prejudges any request made by the Government. The Government should reciprocate, and when it is pointed out to the Government that there is danger in a Measure such as this, they should meet the wishes of the House of Commons, as they have been most clearly expressed this afternoon, and reconsider this Measure. The speech of my right hon. Friend contained the outline of an entirely new judicial system. I am not sure that what he said was in any respect unjust. It is quite plain that in the

event of an invasion you must have a very expeditious system of doing justice. I am not sure that I object to anything that he said, even though he was handing over the powers of death to the courts which he is about to establish. But it is an entirely new judicial system, and the House ought to have at least a short opportunity to consider the significance of his remarks and what it is he is trying to establish. There is nothing of that kind in this Bill.

Earl Winterton: What does the right hon. Gentleman consider would be a reasonable period, in view of the emergency with which we are faced and the fact that the situation visualised by the Home Secretary might come into operation in the next 24 hours?

Mr. Hore-Belisha: That emergency has existed for the last three or four weeks, and there is no reason whatever why the Government should not have produced this or any other Measure three or four weeks ago. We ought at least to have a day in which to read the OFFICIAL REPORT containing the statement of my right hon. Friend. We do not want to embarrass him and withhold powers from the Government which are absolutely vital, but the fact is that the Bill does not correspond with what my right hon. Friend said this afternoon, and the House of Commons at least ought to be given the benefit of the doubt on behalf of the citizens whom it is our duty to protect. My right hon. Friend is one of the most reasonable administrators. He shows courtesy and consideration in every respect. Nobody is trying to embarrass him. He would get his new Bill through possibly without more than two or three speeches—a very short discussion. I think we might at any rate be allowed a slight opportunity of considering the speech of my right hon. Friend in the light of this Bill, and my right hon. Friend might also choose to reconsider some of the evils in this Bill to which attention has been called.

5.0 p.m.

Mr. Maxwell Fyfe: We must consider the question of whether we are going to give a Second Reading to this Bill in the light of the circumstances with which we are faced and the present weapons with which we have to meet these circumstances. My


right hon. Friend the Minister for Home Security did explain briefly the position in which the military find themselves today if the necessity arises of constituting what is known as military law. I think it is only right that the House should appreciate the position in which military commanders should be placed and also appreciate the distinction—which was not quite apparent in the speech of the hon. Member for West Middlesbrough (Mr. K. Griffith)—between courts-martial and military courts which have to function should military law be necessary. The hon. Gentleman will, of course, appreciate on a moment's reflection that if it is necessary for military law to be established in this country, the ordinary forms of courts-martial are not necessarily active. They are courts which are established for the trial of those subjects under military law, which is, roughly, the Army as it is constituted to-day. If martial law is established by a military commander on the ground of necessity, he has then to use such material as is at hand. He can use the machinery of courts-martial, if it happens to be there; otherwise he has to operate, as many British commanders have had to operate throughout history, with simple committees of officers who investigate the matters which come before them. If he does so, he is subject to the point which my right hon. Friend made and which deserves emphasis. He is taking his career and his life in his hands, because, if he shoots somebody in those circumstances, however strongly his military court has recommended it, he is liable to be tried for murder, and many a British commander has been so tried in the past. But, apart from that, he has to consider—and it is no mean task in these days of emergency regulations —whether the necessity is sufficient to justify him in utilising his powers. That is to be said from the point of view of the commander.
Now look at the effect. If he sentences someone to death, it is irrevocable, and the sentence takes effect, but suppose he thinks the crime is deserving of something less than the death penalty, say, 10 years' penal servitude. If the offender goes outside the martial-law area, then the sentence of penal servitude comes to an end, and no effect is given to it. He cannot be transferred to a civil prison. From every point of view these are handicaps which have to be faced. Supposing

the position with which we are envisaged to be one in which Germans have landed somewhere near the Wash, we must consider what must obtain in Norfolk or East Anglia, the region of invasion. The Home Secretary comes forward and says, "In that area I ask you to accept as a substitute for courts or military committees, under martial law, special civil courts which will be manned by someone of High Court judge calibre, sitting with two justices and will have rules of procedure which will be the same as apply in our civil law, except that the committal procedure will he done away with in any case which comes before the court" —

Mr. K. Griffith: None of this is in the Bill.

Mr. Fyfe: The hon. Gentleman made two points. He made that point quite clearly and audibly, and he also argued against some provisions in my right hon. Friend's speech. Surely one is entitled in ordinary Debate to follow both those lines of argument, and that is what I am seeking to do at the present time. I am dealing with the points he made with regard to the withdrawal of powers of committal for trial. I ask him to face facts. Let him and other hon. Members imagine that Norfolk is partly held by the enemy. Does he really think that if a civilian cuts the telegraph wire to brigade headquarters in Norfolk when a bombardment is going on, you are to get two justices to spend all day hearing evidence taken down in longhand before he is then committed for trial?

Sir R. Acland: He would be arrested by the military authorities.

Mr. Fyfe: The hon. Baronet has not paid attention to the proceedings. I am suggesting that in these areas there will be civil courts but that some of their more elaborate trappings will be done away with.

Mr. Beechman: Will the hon. and learned Gentleman say where the words "civil courts" appear in this Bill?

Mr. Fyfe: My hon. Friend has made an excellent debating point, but on-which, on consideration, he will see  absolutely clear in the Preamble of the Bill, which states that by the Emergency Powers Act His Majesty was enabled to exercise certain powers and that these


powers did not include the right to try civilians by court-martial under Subsection (5). My right hon. Friend has explained that under that power people might say that the courts which he proposes to establish are analogous to courts-martial, although they are not in court-martial form. Therefore, he has said that in order to avoid suspicion of this attack, he has put that Preamble into the Bill and is establishing civil courts. I ask hon. Members in this House to consider the situation which I have envisaged—an invasion of this country. I suggest that what is necessary is even a more complete marrying of the present military system with the civil system as it exists.
The difficulty which I see in the event of invasion is that any civil court, including those which have been adumbrated by the Minister, could function in what I might describe as forward areas. I think the Minister himself envisaged that in these forward areas it might be necessary to have what is commonly known as military law, that is, the supersession of ordinary law and the commander taking measures necessary to protect the safety of his troops in the country he is holding. It seems to me that the better method would have been to have given the military commander in the forward areas the right to certify that in such areas trial by civil courts of any kind was impossible, owing to the military situation and the difficulties of communication, and that in these areas, and these areas only, where he so certifies, there could be trial of civilians by court-martial as distinct from military courts. In these circumstances you would have a court which is already functioning, for which personnel is easily obtainable, and whose decision could be reviewed in the ordinary way as decisions of courts-martial are reviewed to-day. I see the difficulty of the courts of the kind which my right hon. Friend envisaged functioning in the forward areas in which there is fighting or fighting is imminent. Therefore, if one could have a provision which could be carefully safeguarded that in such areas, and such areas only, courts-martial could function, a great deal of the difficulty which would face a military commander would be done away with at the present time. He would no longer be in the position of a military commander having to take the risk of estab-

lishing military law. He would have the right conferred on him by regulation under this Measure to constitute courts which will be ordinary courts, with the rules of evidence applicable and with their powers subject, as I have said, to review.
That brings me to another aspect of the matter—what the right hon. Gentleman has raised by his discussion of the other regulations constituting the death penalty for the offences of looting and forcing a guard. It seems to me that at the present time one will have considerable difficulty in dealing with civilians in forward areas unless the local military commander is given power to impose certain local rules, the breach of which will be treated as an offence. For example, it may be absolutely essential in some areas that you should have an early curfew or special regulations, with regard to lights and the like, which the military commander has to recommend to the Deputy Regional Civil Commissioner, who then recommends them to the Civil Commissioner, who, in turn, applies to the Minister. All that channel has to be swept before those regulations can come into force. If these courts or any courts are to be instituted—

Mr. Bevan: On a point of Order. The House is labouring under a very great difficulty in that 75 per cent. of the hon. and learned Gentleman's speech has so far referred to nothing which is in the Bill.

Mr. Fyfe: It is vital.

Mr. Bevan: It is certainly vital but not relevant and my submission, Mr. Speaker, is that the hon. and learned Gentleman is speaking about what the Home Secretary described as his intention. Once these powers are conferred, any number of regulations my be introduced later to which the right hon. Gentleman has not referred. Therefore, I submit with all humility that there ought not to be any discussion at this moment directed to anything except the powers which are conferred on the Executives by the Bill before the House. Otherwise, we shall find ourselves completely in a fog.

Mr. Speaker: I have listened carefully to what the hon. and learned Gentleman was saying, and I thought it was relevant.

Mr. Bevan: Relevant to what?

Mr. Speaker: To this Bill.

Mr. Fyfe: One of the difficulties which will occur in the situation which the right hon. Gentleman envisaged as being the pre-requisite of the Bill was the absence at the moment of power in the competent military authority to make regulations which are necessary for his locality, and I suggest that these courts would function with far greater efficiency and power if the person who should decide what rules and regulations were necessary in order to defend the district which is given into his military charge was the military commander, and that he should not be required to apply to the Deputy Civil Commissioner, who in turn would go to the Civil Commissioner, and he in turn to the Minister.
Some of the speeches that have been made have not expressed the feeling which is deeply and widely held in the country to-day. There is an immense desire in every class and section of the community for vigour and action in punishing offences against the State and our war effort. I feel that some of the speeches that have been made will be interpreted as attempts to put a debating brake on the war effort of the country. In the last few months the country has been amazed by the small and almost unimportant charges which have been laid against civilians for serious offences which in fact amount to treachery. I know that it is not for the Home Office or the Minister to decide what charges will be laid, but for the Director of Public Prosecutions, for whom the Law Officers are responsible to this House. But I think it ought to be made clear that the country as a whole—and I am sure that on this point I speak for the vast majority of the citizens of the country—want such offences to be dealt with in the most severe way and under the most onerous charges that can be found, and that in that way and in the way of securing for them in conditions of difficulty a speedy trial, a trial which suits these conditions, we can discuss it, attuned in one way to the old legal ways which my hon. Friends and I respect so much, but also discuss it with the prospect clearly in mind of these old legal ways being impossible tomorrow. I think this House, irrespective of debating points and allowing, it may be, their very keen and active desire for adequate consultation to slumber for this once, ought to co-operate with the Minister in finding the best way of dealing

with the situation. I suggest that the best way of dealing with it is to have these efficient and well-manned civil courts operating in areas which are liable to invasion, or actually subject to invasion, as far forward as they can go, and beyond that, and only in the fighting area, I ask the House to trust the military commander who has to defend that area with adequate powers simply to protect the safety of his men and leave their fighting effort untrammelled.

5.21 p.m.

Mr. Logan: I will not say that I am wholly in favour of the Bill, but it is very difficult to accept its meaning as laid down by the right hon. Gentleman in introducing it. I hope he will not think I am personal when I say that in reading it I am unable to find in it that which he himself mentioned in regard to it. If it is to be by regulations, I am convinced that we ought to know what the regulations are to be. At least some idea ought to be given us. The hon. and learned Gentleman has great knowledge of the courts, and he must admit that this is going to be a revolution. It is something that we have never experienced in this country, but every one of us to-day is faced with a situation the like of which we have never known before. Therefore, we must bring into operation things altogether outside the ordinary. I was wondering, though we all know that it is absolutely essential that a Bill should be brought in to meet emergencies, whether the powers to be vested in the commanding officer can be specified. Civil courts must go by the board at a time such as this, and we must allow a commanding officer the fullest authority to deal with emergencies that may arise, but I cannot see the utility of two justices sitting with him. They may have all the knowledge in the world of local conditions but not knowledge enough to satisfy the commanding officer, who might take no notice of them at all. I do not see what right they have there unless they have some corresponding power. What are they there for? Is it to counsel the presiding officer? Is there to be some learned clerk who will advise him on points of law?

Sir J. Anderson: The hon. Member is under a misapprehension. The presiding officer will be either a judge specially


selected or a legal gentleman qualified for high judicial office, and not the military officer.

Mr. Logan: I take it that there is no appeal, and therefore the presiding judge will have the power of life and death. Though both the justices may be against him, they will have no power whatever to prevent his verdict being carried into execution. That is a terrific power to give to any individual. In a civil court a citation would be given, and the clerk of the court would explain exactly what was against the accused. When it is a question of death, he ought to be able to understand what he has to meet. I have heard before of legal authorities whose authority, when it came to a question of appeal, has been thrown to the wind. I do not want anyone to question whether it was right or wrong after I have been executed. I want to have some say in it before they execute me. A lawyer once said, "Let them hang you; I will make them pay for it if they do." I do not want anything of that kind in my case. I think there ought to be penalties, and there ought to be a high authority, and it ought to be done expeditiously, but there ought to be safeguards. Could not the right hon. Gentleman safeguard it by giving a citation inside the Bill of the crimes that should be enumerated and dealt with by this special court?

5.29 p.m.

Sir J. Anderson: I should like to say a few words by leave of the House. I am sure that no one either on this side or on that wants to be involved in endless controversy. The Bill has been criticised on the ground that the powers that it confers go far beyond the scheme which I outlined. That, surely, is a criticism which could be made of any Emergency Powers Bill. The contents of the regulations which have been made, now filling a large volume, under the modest Act passed at the outbreak of the war, could not have been foreseen. It was not thought necessary to attempt to estimate what they might be when the wide powers conferred by that comparatively short Act were given to the executive Government. The same is true of this Bill. It comes forward as an amendment of the Emergency Powers Act, and it gives wide powers. I thought it right to explain to the House how it was intended that those

powers should be used, but it is clear that many hon. Members have some misgivings in regard to them, concerned as they are with the important question of the administration of justice. I am perfectly willing here and now, on behalf of the Government, to give an undertaking that words will be introduced into the Bill to make it quite clear that the kind of court which can be set up under the Bill must be a civilian court. Because of the structure of the draft, this will require several Amendments, but they can be made quite easily, and I very readily give the undertaking now that they will be made.
There was another point raised by the right hon. Gentleman opposite with which I think it is not quite so easy to deal, although I have some sympathy with the right hon. Gentleman's point. He suggested that it might be desirable to insert in the Bill words defining more closely the nature of the emergency which would be held by the Government to justify the use of the special judicial procedure for which provision will be made by regulations. I would like to look into that point. It may be possible to do that, but I am not quite sure. I hope that at this stage the right hon. Gentleman will not press the point. Another matter of a general character with which I would like to deal was raised by the hon. Member for West Middlesbrough (Mr. K. Griffith), who wondered whether we could not in this case follow the sort of procedure which has been followed with advantage on both sides of the House in regard to certain other regulations that were made some time ago. I suppose that the circumstances have to some extent changed, in view of the fact that the Government have been reconstituted on a broader basis, but I am quite willing —always subject to the qualification that I do not want anything that would lead to delay in this matter—to arrange to discuss the terms of the regulations informally with a few representative Members of the House. I make that offer.
I hope the House will give the Government their support in an endeavour to get the Bill on to the Statute Book as soon as possible. It is true that the situation with which we are trying to deal in the Bill has been developing for some weeks, but the scheme at which we have ultimately arrived, although to some people it may seem to be something of


which anybody could have thought in five minutes, has involved a great deal of thought and discussion, and we have introduced the Bill as soon as it seemed possible to do so. I hope hon. Members will consider whether, in view of what I have said, it would not be possible to make further progress with the Bill to-day.

Mr. Bevan: May I ask what the right hon. Gentleman proposes? Does he propose that the Second Reading should he finished to-day, and that he should introduce Amendments on the Committee stage? The right hon. Gentleman has not made his intention quite clear.

Sir J. Anderson: What I hope is that, in view of what I have said, we shall finish the Second Reading to-day, and take the Committee stage, with Amendments which will be put down to give effect to the promise I have just given, at the earliest possible moment, to be arranged in the usual way.

Mr. Glenvil Hall: Does the Home Secretary think it possible to graft Amendments on to this Bill while leaving the main structure of the Bill as it is now? With all due respect, it seems to me that the Bill is so drafted that the right hon. Gentleman will find it impossible in that way to meet the criticisms that have been made from all parts of the House this afternoon. Would it not be possible to withdraw the Bill and to introduce another Bill more in keeping with the points of view that have been expressed?

Sir J. Anderson: I hope that we may obtain the Second Reading to-day. I have taken certain precautions, and I am satisfied, on advice, that it will be possible to make Amendments in the Committee stage that will have the effect I have indicated. It cannot be done by a word here and there, but only by several Amendments.

Mr. Bevan: While the whole House appreciates the necessity of allowing the Government certain powers to deal with a situation that may arise at any time, does the Home Secretary fully appreciate that perhaps he might be able to get an agreed Bill through the House much more quickly than he would be able to get a controversial Bill through the Committee stage? If the right hon. Gentleman does not carry the whole House with

him, the Committee stage might conceivably be quite protracted, with a large number of Amendments put down from various parts of the Committee; whereas an agreed Bill might go through its Second Reading and Committee stage far more quickly.

Sir J. Anderson: I think it would be a pity to throw away the Debate which has already taken place. We might finish the Second Reading, and, if it was desired, discuss the form of the Amendments to be put down. I am advised that the framing of the Amendments to give effect to the promise I have given will not present any considerable difficulty.

5.37 p.m

Commander Sir Archibald Southby: I think the House would like to know where it stands at the present moment. We have had a Debate lasting an hour and a half, in which the Bill was presented by my right hon. Friend the Home Secretary, a speech was made from the Front Bench opposite, a speech was made by a right hon. Gentleman on this side, who is an ex-Minister, a speech was made by the hon. Member for West Middlesbrough (Mr. K. Griffith), speaking presumably for the Liberal party, and there were speeches by two backbenchers. We then had a winding-up speech by the Home Secretary. It is difficult for the House to deal with a Bill of this magnitude, which will effect the constituents of every hon. Member, without having a chance really to discuss it, and to have the winding-up speech at the end of the Debate. I fully appreciate that my right hon. Friend desires that this Bill should be passed as soon as possible, but other criticisms may be made as the discussion goes on, and I should like to have an assurance that we are to have an opportunity thoroughly to debate the Bill, whatever decision may have been taken after a discussion lasting an hour and a half. [Interruption.] The Home Secretary's speech was a fairly long one and he gave various promises to an hon. Gentleman who had spoken, without waiting to hear other hon. Members on this side of the House who might have a point of view to put forward. When discussing a matter of this magnitude, it seems to me that the views of all hon. Members ought to be heard before a decision is come to by a responsible


Minister; otherwise we might just as well not come to this House at all.
With regard to the Bill, I fully realise that the necessities of the present time make it imperative that we should make changes in our judicial system in order to obtain speed and efficiency of working in circumstances where the ordinary procedure is impossible. There are two alternatives. One would be to have a declaration that a state of particular emergency exists in a certain area and that in that area, under the jurisdiction of the military commander, courts martial, the procedure of which is well known and well established, should take the place of the civil courts. That is one alternative, and in my submission it would probably be the better. There is no fairer or more just court than an ordinary court martial, as everybody who has had any experience of courts-martial knows. I think the ordinary citizen would fully appreciate the fact that in an area in which a condition of affairs obtained which made the ordinary functions of the civil court impossible, the military commander should take the necessary steps to keep law and order and to deal with offences by the well known procedure of a court martial.
That is not what the Government propose. They propose the other alternative—a special type of court which would be set up to take the place of the ordinary civil procedure. It is perhaps a pity—and certainly the speeches of hon. Members have shown it to be a pity—that in the Bill as presented the word "civil" is not inserted between the words "special" and "courts" in line 12, page 1. If that had been done, we should have known where we were. But my view is that it is not a good thing to set up this type of special civil court in the rather nebulous way in which it has been defined by my right hon. Friend in his speech. If we are to change the judicial system of the country, if we have to change it and to set up a special court, let us have a Bill which will set forth precisely what the powers of that court will be, what offences it can try, and how it will work. We shall then know where we are. The House will be able to debate the Bill, to make any Amendments it thinks fit, to act with great speed, and pass the Bill as quickly as you like.
I entirely agree that the country demands that drastic and efficient punishment should be meted out for offences which are treason. We should not play with people who are traitors to the State, but deal with them drastically, and to that end, it is necessary to have special powers and courts to deal with them. But to change the judicial system of the country by regulations, when we do not know what the changes really are to be —and shall know only when the regulations are issued and shall not be able to amend those regulations when they are laid before the House—is something that ought not to be passed through the House in an afternoon. It would be a simple thing to bring forward a Bill envisaging the machinery of a special court to take the place of the existing machinery, and the Bill could go through all its stages in a day; but if we are to set up that type of court, we ought to know precisely what type of court it is to be, and it should be plainly stated in the Bill. My own view is that that is not the type of court which the circumstances demand. I would sooner see the existing machinery of civil trial carried on in those areas of the country where it is possible, and where there is an area in which that is impossible, then the House should give authority to the military commander to set up an ordinary court-martial. If that were done, we should know precisely where we were.
This special court which is proposed will be a one-man court, but a court-martial is not by any means a one-man court. It is true that in this special court two justices of the peace are to act as assessors, but they will not have the slightest influence on the decision. They may protest and object but that will not make any difference. In the end, the decision will be the decision of the president of the court. Infinitely preferable to that one-man system would be the ordinary court-martial the decision of which is liable to revision, and the working of which is well understood by the people. I ask the Government to reconsider the question and withdraw this Bill. If they then decide to institute a special type of court, I ask them to bring in a Bill which we shall be able to understand—at least I hope we shall—and from which we shall see exactly the sort of court it is to be; but, better still, I ask them to leave the existing machinery


alone, to take the necessary steps under certain conditions to declare martial law in certain parts of the country, and then in those areas to let us have the ordinary old-established and well-understood court-martial procedure.

5.44 p.m.

Mr. Glenvil Hall: I shall be brief, because I think the whole House is pleased that the Home Secretary has promised to consider Amendments to the Bill and not to take it through all its stages this afternoon. Those who have been Members of the House longer than I have will perhaps correct me if I am wrong when I say that this afternoon has been a unique experience. As far as my knowledge goes, I do not know of any Minister, at any rate in living memory, who introduced a Bill of such magnitude, hoped to carry it through all its stages in a single afternoon, and yet did not once refer to the actual provisions of the Bill he was introducing but talked instead of something quite different. The Home Secretary will remember that he did not once refer to a single Clause in the Bill. The curious thing is that although the Bill deals exclusively with the applications of martial law to civilians, the whole tenure of the Home Secretary's speech was to the effect that martial law should be used very sparingly. The Home Secretary also said that most of the offences which would conceivably be dealt with under the powers provided by this Bill could already be dealt with by powers already possessed by his Department. He referred to looting and other offences, and I think I am right in saying that he indicated that all these were covered by powers already possessed by the Government, or already put into regulations now in force.
As the Home Secretary has kindly promised to bring in Amendments to this Measure, I would ask him not to assume that the House, generally, approves of the outline of the regulations he gave in his opening speech. To be quite frank, his references to justices of the peace, sitting with a president of the court, made my blood run cold. I immediately thought of the type of gentlemen who own allegiance to the present Patronage Secretary, sitting with some president of a court in a given area. As far as I am concerned, if I had the choice between a military court and some courts of summary jurisdiction of the kind known to us

all, I am positive that I, and most other people too, would choose the military court. I hope the Home Secretary will remember, in setting up new machinery, that he may be jumping out of the frying pan into the fire and may be making things worse than they otherwise would have been.
I would most earnestly suggest that in the new Amendments he produces, he should make some provision whereby the death penalty is in no circumstances imposed by these courts. Even in some of the Amendments to the Defence of the Realm Act passed in the early stages of the last great war it was laid down that so far as the death penalty was concerned the final word should not lie with courts comparable with those suggested. I do hope, therefore, in view of the fact that the death penalty is a final act, that he does not leave the power to implement it in the hands of local courts of this kind.

Mr. Logan: Will the hon. Member say what court is to deal with the death penalty?

Mr. Hall: As I visualise it, the Home Secretary indicated that in certain cases people who had been apprehended could be sent out of the danger areas into comparatively safe areas—areas free from invasion or military turmoil. If that is so, I see no reason, except in certain circumstances where spies are caught or in the case of offences of another kind, which I need not specify, why people who have been apprehended should not be sent into another part of the country and dealt with there. Between now and the other stages of the Bill, I hope the Home Secretary will consider the points put forward this afternoon, and that he will realise that these are very serious powers which are being put into his hands, and that he will see to it that the community at large is safeguarded in every possible way.

5.51 p.m.

Earl Winterton: I should not have risen to speak but for the speech made by the hon. and gallant member for Epsom (Sir A. Southby). He is, of course, entitled to his own opinion, and I do not wish in any way to attack him personally. But it would be unfortunate if his opinion went forth as representing the view of the Conservative party. I fundamentally disagree with it.

Sir A. Southby: On what possible grounds does the right hon. Gentleman suggest that I have ever arrogated to myself the representation of the Conservative party? Indeed, if that were so I might well represent it a great deal better than he does.

Earl Winterton: I am sorry that the hon. and gallant Member should have taken exception to a remark which I should have thought was unexceptionable. The hon. and gallant Member spoke with his usual energy and eloquence, and put a certain aspect, and I, with great humility, rose to submit that that was not the view of the Conservative party. I am sorry if the hon. and gallant Member should object to my having said so. All I said was that as he made his speech in opposition to the Government, I, as a supporter of the Government, seemed entitled to reply to it. But that is not my only reason for rising. He is really in opposition to the views which have been expressed by supporters of the Government in all parts of the House, including my right hon. Friend on the Opposition Bench. While some hon. Members may object to the manner and method in which this Bill has been introduced, none is in favour of the views brought forward by the hon. and gallant Member for Epsom. It is a very serious view which he has put forward. He suggested that in the zones which will become fighting zones—that is to say, where the ordinary process of our civilian life in ordinary times will not operate—the military courts or the ordinary courts-martial should deal with offences committed. I do not think anyone else on either side of the House is in favour of that point of view.

Mr. Maxwell Fyfe: If the right hon. Gentleman will allow me, I think I made it quite definite, and I think it is a view shared by a good many hon. Members that in the fighting areas the military commanders should have the right to certify that no civil court of any kind should function, and then we should have the right to try civilians in a field court-martial in the back areas of these invaded zones.

Earl Winterton: All that I say is that that is not the view of the Government. I know that the hon. and learned Member put forward a slightly different view, but I did not gather that that was his view. There may be circumstances in

which it is impossible for the courts set up under this Bill to act. I should have thought it most serious that it should go forth in the House of Commons that in what may be the fighting zones, in areas where the ordinary civil process does not go on, the best form of dealing with serious offences was by the ordinary courts-martial.

Sir A. Southby: I am sure the Noble Lord would not wish to misrepresent what I said in my speech. He should go on and quote what I said, namely, that if the Government are going to set up special courts, the whole procedure should be embodied in a Bill to be brought before this House.

Earl Winterton: That is a different point, and, there, to a certain extent, I sympathise with the hon. and gallant Member. I am not concerned with defending the manner and method in which this Bill has been introduced; but I should have thought that one thing was abundantly clear. As I understood the right hon. Gentleman, it was highly desirable that to deal with certain very serious civilian offences special courts should be set up, having some of the characteristics of courts-martial, but not being courts-martial in the ordinary sense. As I understand it, the very essence of the Bill is that special courts are to be set up with highly qualified persons of judicial standing

Sir Joseph Nall: The Bill does not say so.

Earl Winterton: The right hon. Gentleman has told us that that would be the case, but I am not defending the manner and the way in which the Bill has been brought to us. They were special courts having some of the attributes of courts-martial, but with a high judicial authority set over them. I should have thought that was a better way of dealing with it, rather than to hand it over to a court-martial. A great many of us in the Forces during the last war who had no previous legal experience sat on courts-martial. I do not wish to say anything against them in their method of dealing with military offences. I think the British court-martial system is a very fair one, but I do not think it is appropriate to deal with the kind of offences visualised in the right hon. Gentleman's speech. I think it is much better to


set up special courts. I agree that it would probably have been better if the matter had been more clearly explained in the first instance. The right hon. Gentleman met the point of view put forward from these benches in regard to having reasonable time to consider any Amendments which might be put down, and also for the purpose of consultation between him and those representatives of opinion in other parts of the House. I think it is a happy example of the way in which we now do business in this House, when the ordinary party system is abolished.
I would repeat the point which I have already made. I say that the urgency of this matter is very great indeed. It may be a question of hours, and therefore those in favour of the general principle of the Bill must co-operate to the utmost of their ability and help the Minister to get it through, at least before the House adjourns on Thursday next, otherwise we shall be in the position that, if the emergency occurs, things may happen as a result of the absence of this Bill, which afterwards will be greatly regretted. As far as public opinion outside this House is concerned, it is determined to see that justice is meted out, and very quickly, to any Quislings. It does not want to hear of telephone wires being cut or anything of that kind. Therefore, we are not in any disagreement on either side of the House on this, but only on the manner in which it should be done, and I suggest that the Home Secretary's proposal is a good one.

6.0 p.m.

Mr. Silverman: Everybody is in agreement that the country is prepared now to give the Government whatever powers they need in order to deal with the kind of situation which they envisage. The criticism of the House as a whole which is directed to this Measure is not that the Government ought not to have whatever powers are necessary, but that it is sought in this Bill to give undefined and wide powers which are far wider, if one is to judge by the speech of the Home Secretary, than the Home Secretary himself desires. Something has been said about urgency, and it has been urged that we should pass this Bill at once because no one knows when the emergency which it is desired to meet may be upon us. Would it not

have been preferable for that very reason for the Government to have come to the House with a Bill which defined the powers they wanted, and said to the House, "Give us these powers now, pass the Bill through all its stages now, and we are telling you exactly what powers we require."? At the end of to-day's Debate the Ministers would have gone back to their Departments armed with every one of the powers for which the Home Secretary pleaded. That would not have delayed giving the Government power. They would, by that means, have got their powers more quickly than they will get them under this Bill. When it is said that the country is prepared to give the Government full powers, I hope no one supposes that the House or the country is prepared, unless far better reason is given than has so far been advanced, to make the death penalty applicable by what is virtually a one-man court under a regulation which is not before us and for an offence which is not yet specified.
The speech of the Home Secretary was meant, I think, to convey the extent to which the powers sought by this Bill are intended to be used. He presented his argument in that spirit. One is entitled to infer that the powers in the speech of the Home Secretary, as distinct from the powers contained in the Bill, are what the Government think are necessary. It may be said that as the situation develops it may be found, as has been found under previous emergency legislation, that new circumstances not contemplated have arisen requiring further amending legislation. If that were the case, the Government's experience since 3rd September last must be sufficient to convince them that all they would have to do in those circumstances would be to come to the House with a Bill containing what further powers were necessary, and they would have got them from the House without difficulty and in shorter time than regulations require.
Something has been said about courts-martial. It is not often that I find myself in complete agreement with the hon. and gallant Member for Epsom (Sir A. Southby). This is the only occasion on which I have found myself in complete agreement with every argument in his speech. When we find such an unaccustomed conjunction
of opposites it may be that each of us has independently stumbled upon the truth. What are these special courts? What law are they to administer? The Bill does not say. The Home Secretary spoke of offences. Offences against what? Offences against existing regulations and against future regulations of which we as yet know nothing? Offences against the present criminal law? Will the courts have power to punish anything which in their opinion may be wrong or undesirable? There is nothing in the Bill to say. The real offence which this Bill does to the conscience of the House is that under it it will be possible to make regulations by which every safeguard that the citizen of this country has ever had against arbitrary action by the Executive is removed without possibility of amendment in the House.

The Attorney-General (Sir Donald Somervell): The courts will, of course, administer the law of the land, including the Defence Regulations, like every other court. The presence of the word "offender" in Sub-section (1) makes quite clear, I think, that they will administer the law for the time being in force.

Mr. Silverman: I would not like at the moment to engage in an argument with the Attorney-General on the meaning of the word "offender." He and I have recently been involved in an argument elsewhere as to what it means. Assuming he is right—and I am by no means convinced—that an offender is a man who commits an offence, the offence is not defined. It is not against what regulation or what law he is an offender. Suppose the right hon. and learned Gentleman is right, is he really advising the House to be content with that? Suppose that on some ultimate analysis of the meaning of the word it should turn out to mean that the offences must be those against existing or future law, is it sufficiently certain for the House to be asked to take that risk? I should have thought not.
It would have been in every way preferable for the Government, if they thought that special courts were necessary in certain circumstances to have special powers to administer special laws in special ways, to have come to the House with a Bill defining the constitution of the courts, the offences, its powers and

mode of procedure, and ask the House for authority. I have no enthusiasm for what is misnamed martial law, for that means no law at all, but I would infinitely prefer that the present Common Law power to which the Home Secretary referred should be applied, with the ultimate sanctions which it involves, than that the Government should seek by a Bill of this kind to give the stamp of legislative authority to a court which is really only the same thing as a drumhead court-martial so far as its powers are limited by this Bill. Even under martial law there is a well-defined power of review. The court-martial is not a one-man court, and even when its decisions are given there are authorities in the background who normally review them. In this Bill that review and all review go. Clause 1, Sub-section (2), makes provision for
the apprehension and punishment of offenders and for their trial by such courts and in accordance with such procedure as may be provided for by the regulations, and for the proceedings of such courts being subject to no review or to such review as may be so provided for.
That is to say, regulations which are not before us. Even the machinery whereby decisions of a court-martial are reviewed by quasi-judicial military authorities goes under this Bill, and there is no review at all. It is true, as the hon. and learned Member for the West Derby Division of Liverpool (Mr. Fyfe) said, that an officer presiding over a court-martial might find himself after the emergency subject to processes in the courts under the Metropolitan law. He might even find himself charged with murder if he had ordered a person to be shot. I suppose that the court before which he was tried would give the fullest weight to the emergency under which he had acted. The House of Commons would, no doubt, as on previous occasions it has never hesitated to do, pass an Act of Indemnity covering such things, as it did after the last war. All these things have to be taken into account, but ultimately it is right and proper that a military officer, compelled by the emergency of the moment to constitute himself a judge of life and liberty, should have the consciousness in his mind that the time would come when he would be called upon by the civil law to answer for what he has done and to accept responsibility. That is a very proper and sufficient sanction.
I appeal to the Home Secretary not to persist in the course he has taken. It would be in every way better from the point of view both of speed of procedure and unity in the country if he were to withdraw the Bill and to choose some necessarily early time to put into a Bill the regulations which he requires, and which no doubt exist now in his office, and say to the House that these are the powers which he requires, and we will give them to him.

6.13 p.m.

Captain Gluckstein: I should like to reinforce what my hon. and gallant Friend the Member for Epsom (Sir A. Southby) said, even at the risk of offending the orthodoxy of my Noble Friend the Member for Horsham (Earl Winterton). This is a bad Bill, and I hope that the Home Secretary will act on the advice which has been given to him by a number of Members to-day—withdraw it and bring in another Bill which will set out fully what his intentions and desires are. The House of Commons in its present mood will give him everything he wants and more, but this Bill, which is clearly a compromise Measure, is really only a halfway step to martial law. It completely overlooks the fact that in a country the size of this one, one cannot envisage a state of warfare which will be so static that we shall be able to divide it into safe and unsafe areas. The warfare may shift about from hour to hour and from day to day, and it is impossible to say that military courts shall operate in the war zone, that behind that zone there will be special courts, and behind that the normal processes of civil law. The thing does not make sense in a country the size of ours. It might work in France or in the United States, but here, let me assure my right hon. Friend from my own recent experiences, the thing is impossible.
Warfare to-day moves at such a rate that you cannot be certain to-day that there may not be an entirely different state of affairs in another part of the country to-morrow—I do not say an effective occupation, but such occupation as would dislocate all your processes of law and everything else. I wish that my right hon. Friend would reconsider the matter from that point of view and take advice about it from his military advisers.
What is the objection to having court-martial procedure? Here we are proposing to set up a court of a type which is quite unknown to this country and is regarded with, I think, quite justifiable suspicion by a number of my hon. Friends. It does not approximate to anything that we have or to anything which a military court does. What is the objection to having ordinary court-martial procedure, with all sorts of safeguards attached to it, to operate in areas which are declared to be areas in which it ought to operate?
Let us consider for a moment what a court-martial does to-day. There is a great deal of misapprehension about it in the minds of some of the right hon. Members of the Government. To-day a court-martial usually consists of about 90 per cent. of civilians. It is not full of bloodthirsty, ravening soldiers, because in the present state of the Army, with the number of reservists and others who are in its ranks, practically nobody in the court is a regular soldier at all, and nearly all have healthy civilian backgrounds; so there is not any very serious danger of the military trampling on civilian rights. Let me suggest this to my right hon. Friend as being of possible assistance to him. Let us assume that he is going to get one of those notable individuals of judicial rank to occupy a position in the special court. Suppose you take an ex-service High Court Judge and say to him, "You shall revise the proceedings of a court-martial and you shall advise the general who has to confirm its findings whether you think they ought to be confirmed or not, particularly in cases where the death penalty has to be imposed." Then you would have your ordinary field general court-martial presided over by an experienced brigadier who was quite accustomed to trying military offences. Let me remind my right hon. Friend that the type of offence he has mentioned this afternoon can frequently be encountered in a military court. After all, the cutting of telegraph wires or the forcing of a safeguard are not such unusual military offences that an ordinary court-martial could not be trusted to deal with them.
Under Section 41 of the Army Act specific power is given to the ordinary court-martial to deal with civil offences committed by persons subject to military law. Courts-martial are sitting every


day in this country—and they even sat in France—at which people are tried for offences which are known to be offences under the civil law and not under the military law, and nobody has ever complained of the verdicts which have been arrived at by those courts—no, I do not think even the accused, because everybody in this House has testified to the fairness which is always shown by a court-martial. After all, a court-martial is frequently assisted by a Judge Advocate, who understands the law. I hope that my right hon. Friend, in view of what I have just said, will seriously reconsider whether he should set up this special type of court at all, and whether he will not substitute for it a perfectly straightforward court-martial, laying down certain regulations as to the type of offence that a court-martial is to deal with in certain circumstances. If he can do that, I think he will satisfy a great number of Members in this House. He may say that the matter is urgent, but I would like to remind him that he has been told that it is urgent for days, or even weeks; and even though it is very urgent, should we do something quite wrong to-day because something can happen to-night or to-morrow? It would be quite wrong to do it in this slapdash, off-hand way.
I hope that my right hon. Friend can assure the House that the ordinary Common Law right to declare martial law still exists. If it does still exist, then under cover of that right and behind its protection we can proceed to hammer out something which will be more satisfactory than martial law, and we shall know that if the worst came to the worst we could have martial law straight away and that everybody would be safeguarded. I hope my right hon. Friend will be able to tell us that nothing in the Bill takes away the inherent right of the Commander-in-Chief to declare martial law. I should like to know about that, because it is a serious matter, and might be crippling and hampering to the military authorities. I hope the Attorney-General will reassure me that that inherent right to declare martial law in an emergency is still within the hands of the Commander-in-Chief.
There is one other aspect of the Bill with which I wish to deal. I asked the

Home Secretary, in an interjection at the end of his speech, who was to be the judge of when and where the military situation is such as to require the institution of these special courts, and I understood him to say that he was to be the person, that he would advice the Government and that on his advice the Government would act. But with all the genius which the Home Secretary has, how can he be the judge of the military situation? Must not the question of the military situation and its requirements depend entirely on what the commander-in-chief thinks? Might we not get a state of affairs where the commander-in-chief could say, "I want this special court set up" and the Home Secretary might say in effect, "I do not think the military situation justifies it and I do not propose to do it."? That is not an impossible situation. I hope the House will not think that is a ridiculous idea, because this is a very important power, and quite clearly the Home Secretary is a little nervous of it; and if he is nervous of it now he might be more nervous of it later when the emergency actually arose and the demand came. I hope he will reassure us about that and say that he undertakes to accept the view of the commander-in-chief as to the military situation and its requirements. If not, why put in the words "military situation" at all?
Regulations are to be made, and some of the regulations are to be regulations under this Bill and some of them are not. Has my right hon. Friend really considered where that will lead? We are to have regulations made under the Bill and acted upon by these special courts, and some of the other regulations which he has mentioned which are not made under this Bill will be administered by two lots of courts—by the special courts and by the ordinary courts. I think I am not misrepresenting what he told us. If the regulations dealing with the cutting of telegraph wires are special regulations to be made, not under this Bill but as extensions of the presence Defence Regulations, they will be administered—

The Attorney-General: They are made already, as I should have thought the hon. and gallant Member knew.

Captain Gluckstein: I hope that my right hon. and learned Friend will not be too condescending with me. I was


only referring to those which the Home Secretary told us he was proposing to bring in.

Sir J. Anderson: I mentioned two regulations which might have to be made. When those regulations have been made they will be in exactly the same position as any of the other regulations made under the Defence Regulations. They will have nothing in them to show that they are to be administered by this court or that court, but will take their place in the code of regulations, and so long as they remain in force will be administered by the courts dispensing justice for the time being.

Captain Gluckstein: That is precisely the point that I am making, that they will be adminstered by the special courts as well as by the ordinary courts, and cannot the right hon. Gentleman see that if they are administered by two sorts of courts, very different penalties will be enforced in different parts of the country? Cannot he see that in certain circumstances where a special court is dealing with a breach of a particular regulation very serious consequences may follow, whereas in other parts of the country the same penalties will not be applied? I think I have made that clear to some hon. Members, if it is not obvious to the Home Secretary. I do hope that in the circumstances the Home Secretary will withdraw the Bill and give us another, that he will not have any half-way house to martial law, but have ordinary courts or martial courts presided over by any competent persons whom he likes to mention, and who could easily be put into uniform for the purpose or who could advise the confirming officer, and that he will not have a third middle court which does not seem to fulfil any of our requirements.

6.27 p.m.

Mr. Craik Henderson: Before I come to my main argument may I make one remark in regard to what the Minister said about the regulations which he proposed to make? He said they would apply both to England and Scotland. I hope he will keep in mind the great difference between the criminal systems in Scotland and England, when framing the regulations, because otherwise they will be completely unsuitable to one or other of the two countries. The Debate, which has been an extremely interesting one, has shown,

I feel, the complete confidence of all Members of the House in the ordinary courts of the country. It has been evident that every one wanted to see the ordinary courts function so far as possible, but, unfortunately, that is not the situation we have to contemplate to-day. It is not an alternative between the ordinary civil courts and the courts proposed by the Minister, but is a difference between the courts proposed by the Minister and military courts. In the emergency which we all anticipate it is obvious that the civil courts cannot possibly manage to function at all, they are completely out of the question, and the only thing we have to consider is whether it is better to have a military court or to have the court which the Minister has suggested.
I think the desire of the Minister to introduce something in the nature of a compromise court—a compromise between the ordinary oivil court and a military court—is admirable, but personally I question very much whether such a compromise court would work in a grave emergency, and I ask the Minister carefully to consider whether his proposals might not lead to very grave difficulties. Clause 1 of the Bill makes provision for the Minister taking action
where the military situation is such as to require the institution of special courts.
The Minister said that he would consult various people before he decided whether the emergency had arisen. Frankly, I cannot imagine such a thing happening if a real emergency did arise. What the recent campaign in France has shown beyond anything is the speed with which it is necessary to act. It seems to me that it will be very dangerous if we have behind the lines sniping of artillery, as has happened in France, people communicating with the enemy by wireless and by signals, and looting. While all this is going on, the military are supposed to stand by—as I do not expect they would be able to do—while the Minister consults various authorities.

Sir J. Anderson: Sir J. Anderson indicated dissent.

Mr. Henderson: I am glad to have that assurance that the right hon. Gentleman will not consult with someone before he decides that the situation requires one of these special courts, but he made it clear that the special courts are to apply only to areas in which an emergency has arisen, though it has been made abundantly clear


during the Debate that you cannot possibly hope to specify such areas. At least, in France, by the time you had set up the court in one area the emergency would have developed in some other area. There is a good deal in what has been said on various sides of the House as to its being better to leave the ordinary civil law to function where there is peace and quiet or after the emergency has passed, and to let the soldiers act by the ordinary military courts where the emergency does exist. In any case, I am afraid that, if there were a critical emergency, the soldiers would act, and you might have the extraordinary result of some special court attempting to function 40 or 50 miles away from the danger zone while military commanders in the emergency areas felt that they had to act on their own. I ask the Minister seriously to consider withdrawing the Bill and to allow the ordinary military court to function in the area where an emergency had arisen and for so long only as such emergency continued and for the ordinary civil courts to continue to function elsewhere. Otherwise there is a danger of confusion arising between the special courts and the military courts which might require to be constituted.

6.33 p.m.

Sir Ralph Glyn: The Debate has shown a great deal of uncertainty in the minds of hon. Members, but I feel that the Minister has met us as fairly as he can. No doubt this Bill is a compromise, always a difficult thing to justify. The whole House sympathises with the right hon. Gentleman, because they recognise that the original emergency regulations were made at a time when we did not contemplate invasion of this island, and it is clear that amending legislation is necessary. It is clear also that the Regional Commissioners, and the complicated arrangements set up before, must also be taken into account. The real trouble is that, in this island, we may have so many cooks that we do not know what sort of broth we are going to get, and there may be a certain amount of confusion, which is to be deprecated. I understand that the purpose of this system is to set up courts to satisfy the civilian population that they will have a fair trial, but I would ask my right hon. Friend some very simple questions on

this matter. I understand that nothing in the Bill prevents a commander-in-chief having the right to declare martial law in the area where the country is in serious danger, and therefore to overrule completely the civil authority. Otherwise, under the exigencies of action and battle, it will be impossible for a commander-in-chief to ensure the safety of the troops. If he had not these powers, action would undoubtedly be taken without any semblance of a court. Therefore, freedom of action by commanders-in-chief is not interfered with by the Bill.
I believe that these powers were wanted many weeks ago, and I should not be surprised to learn that it has been pressed on the Government by the military authorities for many weeks. It may be argued that the thought of brutal and licentious soldiery is still so uppermost in the minds of many people that it must have attention in this House, but I agree that the composition of the Army to-day is such that a court-martial is one of the fairest tribunals you could have. The objection to them is that you do not want to detach officers for such duties when they are far better employed in other and more active work. Those who know anything about conditions in the defence of this country agree that nothing should detract the officer who is training people from the paramount duty of training.

Captain Gluckstein: Surely it would be possible to have a number of quite middle-aged officers available for this duty without taking the others away from training.

Sir R. Glyn: I do net think that by dressing a man in a uniform we necessarily make him a better to lawyer or a better judge. [Laughter.] I do not impute anything against the hon. and gallant Gentleman who interrupted, because I know that he is doing admirable service in this country. The question of the employment of officers is of very great importance. This Kingdom has always been divided into areas, each under an area commander. In a rapidly moving situation that organisation is the only static thing that exists. The area commander has got to know everybody in the area and is in a position to ascertain who can assist in these matters. I hope that something will be done to make it possible for the area commander to be the competent military authority, acting through


the commander-in-chief, to set up courts and obtain people to form them. It will be found impossible to look upon this country as if it were a vast prairie. It is a very small island. We have heard talk about a battle zone, an intermediary zone and a peaceful zone, but that appears to me to be carrying things to the verge of the ridiculous. In a small island like this you will have the risk of people popping into this area or popping out of that area. German agents will learn to know the lines of demarcation, and we may be sure that they will play up well in regard to coming under this, that or the other court.
What is necessary is to have courts which have the confidence of the people. Many of us feel that if the death penalty has to be inflicted the only satisfaction is that, somebody having been executed for the crime, other people will be deterred. It is no satisfaction to execute people unless notice is taken by others who might otherwise commit the same offences. I think action should be taken by the special court and sentence promulgated at once, so that everybody in the district may know what warfare means.
My last point is that some areas of Regional Commissioners are brought into no less than three military commands. Some of them have little bits that stick out into other areas. I do not think that the control areas are meant to go into the military commands. If these districts are all different, we must avoid anything in regard to courts which will add to the confusion. I beg, therefore, that the military zones, which are well recognised and conform to county districts, should become the areas for the competent authority.
None of us knows exactly when these courts will have to function, and it is the duty of the Government to see that the commander-in-chief and the military advisers of the Government obtain the powers which they feel are necessary, but it is equally our duty to see that the Executive do not take away the liberties of the individual without this House knowing about it. This Debate has been thoroughly justified, and I hope that the right hon. Gentleman will carry out his promise and give us the assurance that, when the Committee stage is over, the Bill will be passed through its remaining stages with celerity. We take a very

great responsibility if we delay something which the advisers of the Executive believe to be necessary.

6.44 p.m.

Mr. Edmund Harvey: It is agreed on all sides that none of us wish by any word of ours to delay action which is really necessary in the interests of the country, but it is equally true that the House of Commons, which has stood for law and the sanctity of law through many difficult times, should at a time like this, a time of great national difficulty, be very careful about any emergency legislation that is passed, to see that it may not infringe upon those things on which our national life is built. It is very significant that from all sides this afternoon hon. Members agreed that the Bill, as drafted, is unsatisfactory. We are all grateful for the spirit shown by the Minister and the promise which he has given to consider Amendments and, in one case, to move an Amendment himself. The Bill is so widely framed and vaguely worded that although the Home Secretary says he wishes to make use of the powers which it confers for a very limited purpose, it would give power to another Home Secretary or another Government to make use of the authority thus conferred in a way which he does not for a moment himself contemplate.
We must bear in mind the effect which the Clauses of the Bill might have under very different conditions. There is nothing in the Bill defining the period during which these special courts will act. The Home Secretary made it clear that it was only intended they should act during this period of special emergency, and I think we must all gladly accept that explanation on his part. But this Bill will be read as one with the earlier Act. It would be possible for that Act to be prolonged from year to year, and it may very well continue for many months after the conclusion of the war, as indeed was the case in connection with the last war, when the Defence of the Realm Act continued to operate after the war was over. The powers conferred in this Bill might be used by a different Government after the close of the war in a way which the Home Secretary does not for a moment contemplate or intend. We should ask him to consider inserting into the text of the Bill some words which will define his intention, that these


special courts are to act only during the period of special emergency connected with intended invasion.
I regret that the Bill is not franker in its phrasing. Why should not the Bill state that its provisions can be used only in the event of an invasion by an hostile force? The general theory of drafting a Bill to-day is not to call a spade a spade but to call it "one of a number of agricultural implements which may be defined by an Order-in-Council under this Act." The Minister means a spade, but his successors could use the term for a plough or a harrow, or even a trowel. We need to see that the wording of the Measure corresponds with the intention of the Minister as explained to Parliament, and that it cannot be used in a way quite contrary to his intention, not by him indeed, but possibly by some other Minister. We have to bear in mind, too, that in spite of what has been said by one or two learned and gallant Members about the great value of courts-martial, there is not only throughout the country a dread of a general extension of martial law, but there is a great tradition which this House has to maintain in resisting the extension of martial law. It is one of the foundations of our liberty which was secured in the Petition of Rights in 1628, when martial law was declared to be illegal, and that declaratory Act was approved by King Charles I. Although it has been said this afternoon that martial law is fairer and juster in many cases than Common Law, we ought to remember the opinion of a great Lord Chief Justice who lived through the Civil War for part of his active life and knew all the horror of war in his own country. I refer to Sir Matthew Hale. He, speaking of martial law, wrote these words:
Touching the business of martial law these things are to be observed. First, that in truth and reality it is not a law, but something indulged rather than allowed as a law. The necessity of government, order and discipline in an Army is that only which can give those laws a countenance, quod enim necessitas cogit defendi. Secondly, this indulged law was only to extend to members of the Army or those of the opposite Army and never was so much indulged as intended to be executed or exercised upon others. For others who had not listed under the Army had no colour or reason to be bound by military constitutions, applicable only to the Army, whereof they were not parts. But they were to be ordered and governed according to the laws to which they were subject, though it were in time of war.

Those words were uttered by a great Lord Chief Justice who had gone through Civil War in his own country, and he maintained that view of martial law. I hope that view will be maintained by this House, that where it is necessary for military authorities to act in an emergency, the House may deal will the position subsequently by an Act of Indemnity and not suspend the ordinary law, which is the great bulwark of our liberty. We have deplored the way in which, across the water, the Constitution of the great French Republic has been abrogated, under the very forms of the Constitution itself, in a couple of days. We need, therefore, in this country to see that we do not, under the forms of law, take any steps which might be used, not by this Government, but by some Government when that law has become an Act, to destroy the foundation of law itself. It is a great part of our heritage that law and freedom are interwoven, and we cannot touch one without endangering the other.

6.53 p.m.

Mr. A. Bevan: It seems to me that the main lines of the criticism of the Government have now emerged in the course of the Debate, and hon. Members who have been here all the time will, I think, agree that the Debate has served a very useful purpose indeed. I started off this afternoon feeling 100 per cent. hostile to the Home Secretary, but after listening to some hon. Members I am almost converted to his support. Apparently, many hon. Members would prefer to see a general system of martial law operating in this country in the near future. That is not the view of many of my hon. Friends on these benches, and I am certain that it is not the view of the large majority of the country. We do not desire to see the civilian population in this country put under the jurisdiction of the military authorities. That is not to say that we want to withhold from the Army the powers they need to discharge their duties. We want them to discharge their duties, but it has been disclosed in the Debate that you cannot in fact make a distinction between an area where hostilities are proceeding and the rest of the country. The point was raised by one hon. and gallant Member—and, indeed, I was going to submit it myself—that it is fantastic nonsense to speak of


an invasion by an enemy temporarily occupying a part of this island as an invading force, and the ordinary processes of justice proceeding in any other part of the country. Some hon. Members have said that it is absurd to speak of these zones in which this form of jurisprudence as indicated in the Bill will operate, and that therefore you cannot have these zones. If you cannot have these zones and the ordinary system of jurisprudence, then you cannot have martial law under the ordinary system.

Mr. Pickthorn: It is the difference between two and three.

Mr. Bevan: No. Is the hon. and learned Gentleman—

Mr. Pickthorn: I am not learned.

Mr. Bevan: I am sorry. I have been given the impression once or twice that he was.

Mr. Pickthorn: I understood that the hon. Gentleman was suggesting that you could not have any division into zones at all, because it had been argued by other hon. Members that you could not have three. The earlier argument had been that there was not room in this island for an active service zone with courts-martial, a back war area with these new tribunals, and a peaceful zone with normal courts. That was the argument. I dare say the argument against having two zones may be good, but the argument against the possibility of three zones does not dispose of the argument that you might have two.

Mr. Bevan: I do not understand now why the hon. Member has interrupted me, because the point I was striving to make was this: The same argument that has been advanced and accepted by everybody, that the island is too small to have a portion of it ruptured without affecting the whole of it, applies to two and three zones—that you must have throughout the country one modified system of justice to deal with a condition of emergency. Where the military authorities see citizens behaving in a manner which will interfere with their own operations they will take action out of court. The point was made of a man being seen cutting telegraph wires communicating with headquarters; a soldier would not tap him lightly on the shoulder and say, "You are under arrest" so that he would be

allowed to cut all the wires he wanted. I should say they would shoot him in the course of cutting the wire. That would be their job, in order to stop him doing it. The military authorities would take whatever action was necessary in their own area to discharge their military duties in that area.
The point was made with force by the hon. Baronet opposite that it was absurd in circumstances of this kind for officers of the Army to be taken from their duties and to have to attend courts-martial. The duty of the military authority in those circumstances, once having seized the offender, is not to pass him behind to another judicial authority but to pass him out of the way so that they can go on with their job. Then he passes out from that area. What he does is not to enter another judicial area but to reach a place where it is peaceful enough to try him.

Mr. Maxwell Fyfe: The hon. Member has come to an important point. Suppose that the person who cuts the telegraph wires is seen by the wife of a farmer who is still in the area leaving the spot where the telegraph wires are cut, but is not seen actually cutting them. He is caught later by a sapper, and found by the sapper's officer and a sergeant to have the pliers on him. That is a case where the evidence is circumstantial, but strong. As I understand the hon. Gentleman's argument, the man would be sent out of the area, and you would have to detach from the fighting forces an officer, a sergeant and a sapper in order that they might give evidence, or else you would have to postpone the trial, so that it would not have the deterrent effect of speedy justice.

Mr. Bevan: The same thing would apply in the case of a court-martial. The men would not be sent out of the area, but they would have to be taken from their duties in order to give evidence.

Mr. Fyfe: The court-martial would be held on the spot within an hour or two, and it would only require three men being away from their duties for a few hours, and never leaving the spot.

Mr. Bevan: If it is possible for a court to be held in that zone—and I should imagine that it would be very difficult—the particular kind of court envisaged by the Bill could be held in that area, so the same argument would apply. The


point that I am making is that in practical administration the military authorities should not be obstructed in doing their job by having to hold courts at all. They should pass prisoners on to courts further back, where they could be dealt with by judicial authorities set up for that purpose. Hon. Members who have spoken have muddled the thing up, because they have established the fact, which everyone knew, that you cannot speak of zones, and yet they imagine such a condition of stalemate between ourselves and the enemy that it would be possible to hold a series of courts-martial in the areas where operations were going on. That is a wholly unrealistic picture of the circumstances that we have to face. I regret that the right hon. Gentleman has not faced the fact that we shall require a modification of the normal processes of justice in this country, all over the country, if an invasion takes place. The question is, what are those modifications to be? The criticism against the Bill is that it does not face that question, and does not enable hon. Members to make their suggestions as to what the modifications should be. The right hon. Gentleman should bring in a Bill which sets out quite clearly such modifications.

Colonel Arthur Evans: If the hon. Member's argument is logical, would he not suggest that in France, both in this war and in the last war, a system of martial law should have prevailed not only in areas which were occupied by the enemy or where there was fighting in progress, but in Paris and Bordeaux as well?

Mr. Bevan: The answer must be a purely empirical one. You have to make a distinction between a large land mass like France and a comparatively small island like Britain. If a landing is made in this country, everything will be disturbed in a very wide area. I submit that in practice what will happen is a modification of our system of justice, all over the country. The question of invasion is irrelevant to the Bill. There is nothing in the Bill about invasion. This new system is to be brought into operation when the Executive think it desirable. The Executive will think it desirable, all over the country, if an effective landing is made in any part of the

country. We can reach one or two reasonable conclusions. In the first place, it is absurd to speak about zoning the country. In the second place, it is repugnant to this House, and to the country as a whole, that there should be general courts-martial. Thirdly, there should be a modification of our system of justice in order to deal with the emergency that might lie immediately ahead, and that modification ought to come before the House in the form of a Bill, and not in the form of regulations, as is suggested. Consequently, the right hon. Gentleman would, I believe, be meeting the wishes of the House and of the country if he withdrew this Bill and introduced immediately Bill of a more elaborate kind.
It may be suggested that there is not time. The answer has aready been made. This contingency has been seen coming for two months. The Executive have had all that time, and it is extremely unfair to ask the House of Commons to discharge its duty in a hurry in this way when the Executive themselves have been so dilatory. If in the next few days an emergency does arise, there is sufficient provision under the existing law to deal with it. There is no reason why we should be rushed into legislation which is so repugnant to our instincts and to the desires of the country. I hope that the Government will not think that our opposition is captious, that we are making it for the sake of making it. We are very anxious to carry the Government with us in this matter, and I am sure that they are anxious to carry the House with them. It would be most unfortunate if they insisted upon the Second Reading being carried to-day and then had a Committee stage—because the Home Secretary has promised the House of Commons a Committee stage as though it were a concession—and then we had so many Amendments down, in order to try to make the Bill workable and agreeable, that it would take far longer than if the Home Secretary had taken the Bill back and, after consultations, had brought in a Bill that would meet our wishes. I hope that the Home Secretary will not feel that it would mean any loss of dignity on his part to withdraw this Bill and to bring in a more satisfactory one. It is because we see the need for modifications in the whole of our system of justice that we
ask him to bring in such a Bill, and we will help to make such a Bill a workable Measure.

7.9 p.m.

Captain Basil Nield: Every hon. Member who has spoken has agreed upon one point, namely, that the time may come, and may come quite soon, when our ordinary civil courts will be unable to function. At such a time, I think the House will agree that the preservation of order and the speedy bringing to justice of offenders is a matter of urgent importance. At the present time the sole means of dealing with such a situation is to make use of the Common Law right which is vested in the Crown and exercised by the servants of the Crown to impose martial law.
The Bill which is introduced to-day aims, in itself and by the regulations which may be made under it, at providing another means for dealing with such an emergency when our ordinary courts cannot function. With that object, I imagine, the House in the main will be in agreement, but as to certain of the matters under the Bill doubts occur to me which I desire to put forward. The first is in regard to the nature of the regulations which may be made under the Bill. My right hon. Friend the Minister for Home Security has assured the House that the regulations will be placed before us, and I have no doubt at all that they will be most carefully considered, but before they are finally drawn I would ask my right hon. Friend to consider two points. The first is the propriety of preserving to the military commander the right to try an offender in what has been called the war zone if it is inconvenient or impracticable to convey him from that zone into the back area where a special court may be functioning. The second point which I ask him to consider in drawing up the regulations is again the propriety of preserving to the military commander the power to make special offences which the particular area may require. It must be obvious to those with knowledge of these matters from the point of view of military operations that special regulations may be required, such as a curfew or restriction of the movements of civilians which must be made at once by the military commander, who is in full possession of the needs of the military operations which he is himself conducting.
The second point which I desire to ventilate with regard to this Bill has already been mentioned by more than one hon. Member, but I would mention it again. In Sub-section (1) of Clause 1 of the Bill it is provided that the power to set up these special courts shall come into being where the military situation is such as to require the institution of such special courts. I have no doubt at all that my right hon. Friend would consult the military commanders before determining when such a situation had arisen, but I would ask him to consider whether it would not be right perhaps to formulate some Amendment which would not place upon him that very onerous responsibility; for, surely, in considering whether the military situation is such as to require special courts, those in charge of military operations are the best persons to judge of the situation.
Finally, I desire to ask this specific question, either of my right hon. Friend or possibly of my right hon. and learned Friend the Attorney-General. Will the Bill, if it becomes an Act, impinge upon the Common-Law right in a military commander to impose what we call martial law? I ask him to assure the House that it does not encroach upon those powers. I am well aware—and the views of hon. Members to-day have made it perfectly clear—that many people are frightened and alarmed by the term "martial law," and I confess that I attribute that alarm chiefly to ignorance of what martial law really means. There has been to-day some confusion in regard to three phrases—"military law," "courts-martial" and "martial law." The position is that military law governs the soldier, and the soldier alone is subject to the jurisdiction of courts-martial, but that is entirely a different matter from martial law, which is the suspension of ordinary law and its supersession by military rule carried out by a military commander who is charged with the restoration of order. Some people appear to think that martial law involves squads of soldiery promiscuously shooting people down at street corners. The slightest investigation into the matter shows that nothing is further from the truth, because under martial law I think it is right to say that while justice must be speedy and effective, it is certainly not rough and ready. Powers which are exercised by a


military commander under martial law involve the setting up of proper courts, a summary court consisting of a senior officer to deal with the lesser offences, and a military court consisting of three senior officers, one at least of them with legal qualifications, to try the more serious offences, and it would be a disaster if that right in these difficult and dangerous times were removed from those in charge of military operations.

Mr. Bevan: Does the hon. and gallant Gentleman suggest that, if this Bill becomes law and courts of this nature are operating in the zones that are spoken about, a commander in such areas would still be competent and wise to exercise his rights concerning martial law?

Captain Nield: I not only suggest, but I submit as a matter of law that the right of a military commander to impose martial law in certain circumstances remains, and that is why I asked for an assurance from my right hon. Friend. I was endeavouring to explain something of the working of martial law, and in my submission it is very much misunderstood. Surely the hon. Member for Ebbw Vale (Mr. Bevan), who has just interpolated an observation, will know that in the most dangerous places, in France and elsewhere, field general courts-martial are generally accepted as being extremely fair tribunals. In these days there is no doubt that the one object uppermost in the minds of every Member is the successful prosecution of the war. To that end we must be prepared to meet every contingency, and in my submission people must be prepared to face such a contingency as would arise if the ordinary and, perhaps, sometimes rather leisurely, civil tribunals could no longer function. I would ask my right hon. Friend to give such consideration as he thinks right to the comments I have made on the Bill, and the regulations proposed to be made thereunder, and I further ask for an assurance from him or the Attorney-General that the right of a military commander to impose martial law if circumstances warrant it is not removed by any Clause in this Bill.

7.21 p.m.

Mr. Stephen: It appears to me that there are three points of view in connection with this Bill.
There are the Government point of view; the point of view expressed by the hon. and gallant Member who preceded me and those who agreed with him; and the point of view that, while modification will be necessary in the circumstances contemplated, the matter is so serious that the House should have before it a Bill which they would be able to modify and amend. This would not he possible if the Government's views were adopted. There has always been a difficulty with regard to regulations in that the House has not been able to amend them; they have either had to be accepted or rejected en bloc. For my own part, I agree that it would be much better if the Home Secretary would introduce a Bill and put into it what he is contemplating putting into the regulations so that Members on all sides of the House would have an opportunity to give the Government the benefit of their experience and knowledge in helping to make the proposals really effective for the protection of the rights of people. At the same time I recognise that the Home Secretary has made a very plausible case. From my experience of the regulations that have been made, and the administration of the law in this country since the war began, the Home Secretary has in general adopted a very proper and wise point of view. Very often he has been ahead of the House and the judiciary in connection with some questions.
I do not want to be taken as being unduly critical of the Home Secretary in view of the amount of common sense he has shown in carrying out his duties but, at the same time, I feel that if there had been power in the House to amend past regulations, there would have been better administration in the country. I do not agree at all with the point of view that these matters can be left to the wisdom of commanders and military authorities. The hon. Member who preceded me spoke about experiences in France and the wisdom and the justice shown there. Well, I think of the last war and of the experience in Dublin when an eminent Irishman, Mr. Sheehy Skeffington, was sentenced to death, that sentence having been carried out by an officer who was afterwards adjudged to be insane. I do not want anything like that to happen in the course of this war. I certainly agree that if we have to


choose between military and civil tribunals, then I am in favour of the proposal of the Government as compared with putting us into the hands of the military authorities. There are many people in uniform who are not at all fitted to act in a judicial capacity, and I would rather see civilian tribunals. It would be better if the procedure were worked out by the House than that we should have to accept the regulations en bloc, as we shall have to do if the Home Secretary's plans go through.
I would like to say to the Home Secretary that I hope that, if his policy is accepted, the civil tribunals will be sound, because there is a great danger in present circumstances of people getting the jitters. This is obvious from what is going on in various parts of the country among people who are acting as magistrates. That they have the jitters is shown by the way they are dealing with certain cases. Powers have been given to the Government, and regulations have been made in order to safeguard the country, but we are now in danger of being nearly as badly off as they are in Germany with regard to what we say to each other. There was a case in the Press a few days ago of a person who expressed the view to another person that Hitler would be here before August. That person, a man of 74, was hauled before a court—

Captain Nield: A civil court, I understand?

Mr. Stephen: I have no doubt that if it had been a military court, he might have been sentenced to death.

Captain Nield: Under what Section?

Mr. Stephen: Probably, under the Section under which Mr. Sheehy Skeffington was condemned to death in Dublin during the last war. However, I want to draw the attention of the Home Office to the way in which the jitters have overtaken some magistrates, and how they are seeking to show their patriotism by thinking they have to act in the Hitlerian fashion.

Mr. Speaker: I do not know how the hon. Member brings that under this Bill.

Mr. Stephen: I am sorry if I have gone beyond the bounds of order, but I certainly think, from some of these cases in recent days, it is just as well that a statement should have been made. I hope, if we are to have these civilian tribunals

set up, there will be a right of appeal. I know there may be many difficulties in the way, but I certainly think, when you set up a court like this, there should always be an opportunity for a person, who may be condemned to death, to appeal to another tribunal. I hope the Home Secretary will go into the matter again and see whether it is not possible in framing his regulations, to arrange for some central tribunal where all these sentences will be revised by people of judicial experience.
I am also concerned about the fact that the Home Secretary told us that a person might be represented by counsel, if he could get one, or have a prisoner's friend to assist him in his defence. I do not think the prisoner's friend is sufficient. There may be people who come before these courts who have done nothing wrong, but, because of their economic circumstances, they are not able to get legal defence. I know there is provision in the law for legal defence and I want to see, in connection with these tribunals, that a person will not be liable to be sentenced where another person who was able, because of his wealth, to get counsel from some distance to represent him would not have been sentenced. It is a point that needs consideration in making the regulations and I put it before the Home Secretary for his consideration. I have no wish to see an extension of military tribunals. I think it is the business of the military people to carry on their own work and it is for civilians to act as the judges in connection with these cases which may be referred to them.

7.35 p.m.

Colonel Arthur Evans: The last speaker and those who have supported his view, appear to my mind to be living in an unreal world. None of us wants to see the conditions to which they have drawn attention obtain in this country, but surely we must not forget that this Bill is specially designed to deal with conditions in areas which, in certain circumstances, will be theatres of war. It strikes me as being an unfortunate compromise on the part of the Home Office to try to divest the competent authority which will be held responsible for the outcome of the campaign in its particular area, of authority which is absolutely essential if it is to administer the area in the interests of the campaign in question.
Various speakers, including the hon. Member for Ebbw Vale (Mr. Bevan), have suggested that the country is so small that it takes only a few hours to motor from one side to the other and it is impossible to have one area administered by a competent military authority under martial law, while another remains subject to the common law of England. If that is the case, if our country is as small as that, and if this condition of war flows so quickly from one county to another, it will be very unfortunate for us in any attempted invasion. We have to be realists in this matter. We have to realise that it is probable that the enemy will attempt to invade the country, not at any one particular point where a line will be taken up and a part of the country isolated, but that attempted invasions might take place all round the coast, some serious, others with a view to drawing our attention from the more important areas.
In those circumstances, it is impossible to suggest that the military commander should have to consult with the Home Office officials, as he would be bound to do under these regulations, about the establishment of special courts. Time is of the essence of the contract. He has to deal with a case, and he has to deal with the person who is accused, in the best interests of the campaign which he is pursuing. Several Members who, from their speeches, have experience of the Judge Advocate General's Department of the War Office and its administration, have pointed out that a field general court martial in certain cases, can be established immediately without an unnecessarily long summary of evidence being produced under King's Regulations and military law and, if the case is an obvious one, it can be dealt with immediately. But if a death sentence is imposed, it would not be a case of the President of the court-martial having become unbalanced as a result of the state of affairs through which he had passed in recent hours or days, and the man being shot as the result of his decision. Before the decision could be put into effect it would have to be confirmed by the competent military authority of the area. I do not recall the circumstances to which the hon. Member drew attention, but that would be impossible in present circumstances. [HON. MEMBERS: "Why? "] For this

obvious reason. If a field general court-martial is assembled and the death sentence is imposed, before that sentence can be carried out it has to b confirmed by the general commanding the area. It is very unlikely indeed that the general commanding the area would be insane, as the hon. Member suggested. That was the logical conclusion of his argument, and, as far as I could see, it was the only argument that he produced against the powers which it is necessary: for the military authority to wield.

Mr. Stephen: I gave the case. Many Members will remember the Sheehy Skeffington case. When the hon. and gallant Gentleman says the sentence would have to be confirmed, he forgets that the general in command, getting the report from the court-martial, would not know whether the person presiding was insane or not.

Mr. Loftus: Is the case to which the hon. Member has referred the case which occurred in Dublin during the rising?

Mr. Stephen: Yes.

Mr. Loftus: Surely, that was not a court-martial? It was a case of shooting out of hand, without any court-martial whatever.

Colonel Evans: I do not think it would be very fruitful to pursue the case which has been mentioned, but I rather wonder whether the War Office are entirely in agreement with this Bill. The Bill must have been the subject of a Cabinet subcommittee, and I think it would be a matter for regret if the views of the military authorities had been over-ridden on this occasion.

Sir J. Anderson: May I remind my hon. and gallant Friend that I stated quite emphatically that there was in this matter no conflict of views, and that it did not represent the triumph of one theory over another. The military authorities, the War Office, and the civil authorities are in complete agreement.

Colonel Evans: I apologise to my right hon. Friend; I must have been out of the Chamber when he stated that. Those circumstances certainly put a different aspect on the case, but let us consider the matter from this point of view. I cannot imagine that in any campaign


during the last 100 years, in the theatre where military operations were taking place any Government or any military force, irrespective of its nationality, has ever consented to the establishment of special courts. If my right hon. Friend has any evidence in that respect, I think the House would be interested to hear it. In the last war, during the invasion of Belgium by the German Army, certainly the German Army did not allow any special courts to be set up. When we advanced into Belgium, we were quite content to rely on our military legal procedure to deal with such circumstances as these. I do not recall reading in the newspapers that during the war in Spain either Franco's forces or the Republican forces—particularly the Republican forces, supporting a principle which has many sympathisers in the House—found it practicable in certain circumstances to put military law on one side and to bring in special courts. I submit that this is a Measure which should be re-examined in the light of the realities of the case. Having regard to the fact that we should be fighting an invasion, it would be quite impossible to allow any other authority to interfere in any way with the responsibilities of the competent military authorities.

7.43 p.m.

Sir Richard Acland: I hope that the Home Secretary will withdraw the Bill, and not ask us to give it a Second Reading and follow that by making Amendments. I ask him to withdraw the Bill for the sake of a united House and for the sake of speed. The right hon. Gentleman has offered to make certain concessions, but I do not think those concessions go to the root of the matter. He has offered to guarantee that these tribunals really shall be civil, and he has offered to try to define military law rather more carefully. I did not hear him offer to make any concession with regard to the words:
(aa) make provision for the apprehension and punishment of offenders and for their trial by such courts and in accordance with such procedure as may be provided for by the Regulations, and for the proceedings of such courts being subject to no review or to such review as may be so provided for.
I want most seriously to warn the Minister and his colleagues—and I am sure there have been in the House this afternoon several hon. Members who share my point of view—that after the experience of

France and after what we know has been an attempt, which is still afoot, on behalf of some of the Ministers and their servants, with regard to a possible censorship of the Press, the Government cannot get on to the Statute Book a Bill containing these words and maintain the unity of the House. The Minister should think very seriously before pressing the House to vote for or against words of that kind. No assurances which he may give and no professions of his intentions make the least difference. If those words are in the Bill, there are many of us who regard that quite definitely as the beginning of the end, and we shall have to act accordingly. The right hon. Gentleman said that he already has these powers, and that it is only as a matter of great courtesy that he has come to the House. If that be so, I venture to say that the House was at some stage deceived, because if the Minister has power already to set up new courts to arrest anyone for anything and impose any penalty by any procedure before any court with no appeal, certainly the House was not informed of that fact at the time when it was asked to give the Government that power. Therefore if the Minister has the power to do these things, then at some stage we were not told what we ought to have been told, because if we had known that we were giving that power, I think something more would have been said about it.
I am not at all sure that the alleged concession to guarantee to us that these courts shall be civil courts is a real one. I am not in the least convinced that some civil court set up ad hoc, consisting of persons appointed by the Minister, and, as one hon. Member said, with the approval of the Patronage Secretary and the whole of his machine, would be any more pleasant to appear before than a straight court-martial. I want also to ask the Home Secretary whether he will tell us a little bit more frankly what is the real problem that is facing him, because I have not been able to make out what it is. We may get fighting in this country and in those circumstances, mixed up with the fighting, people may do things which we want to prevent them from doing. That is the problem. What are those things which it is alleged people may do? Cut telephone wires, spread false rumours? Surely, those are offences that are already provided for in the Regulations. If there is any offence


which is not provided for, I think the right hon. Gentleman ought to tell us what is that offence.

Sir J. Anderson: I gave as illustrations, looting and forcing a safeguard.

Sir R. Acland: Then let the right hon. Gentleman simply introduce two new Regulations to cover looting and forcing a safeguard. I thought that the regulations were very comprehensive when it comes to interfering with the discharge of the duties of the Forces or doing any act likely to assist the enemy. If the Home Secretary would introduce two regulations to cover looting and forcing a safeguard, that would clear up those points. The matter would then be one of procedure. How are we going to deal with somebody who is offending? In connection with this point, I beg the House to consider whether we are now acting under this pressing sense of emergency to which the Minister and several hon. Members have referred. What is this emergency in which we are supposed to act? Is it really suggested that if this House does not pass this Measure, something terrible will happen in the next few days? I cannot see what that terrible thing is—provided, of course, that looting regulations are passed, and no one would object to that.
We all know that we are liable to invasion, but what is supposed to happen, in the event of an invasion to-morrow, which will not happen if this Bill is not passed? Without this Bill it seems to be suggested that people will be cutting telephone wires or looting will take place and that nothing can be done about it; but already, under the Emergency Powers, any constable or member of the armed forces can arrest anyone who is committing offences against the regulations. If it is argued that in these circumstances it is difficult to bring people to trial I will grant that that may be so. Let the Home Secretary ask us therefore to pass a Bill, or sanction regulations, giving him powers, either to keep a man in detention until it is militarily convenient to try him, or to make the trial more expeditious. We cannot be expected, under a plea of emergency, to grant to the executive, powers which will enable it to arrest anyone for anything, and try any one by any secret procedure

without appeal. That, after all, is a fairly accurate summary of the system we have engaged in this war to destroy.

7.53 p.m.

Sir Joseph McConnell: I have heard many speeches in this House, but I have never heard a more inappropriate speech than that of the hon. Member for Barnstaple (Sir R. Acland). But I am not at all surprised, because I remember when the Home Secretary came here to do a job of work, and not as a politician, all the politicians on the Liberal benches tried to tear to pieces a very small Bill which he presented. Now they are making the same futile points when we are on the verge of invasion. This House has to realise that the sooner the old Liberal party stop playing politics the better. They played politics with Ulster, but we knew how to deal with them. They tried to interfere with us when we brought in a very innocuous Bill; when Mr. De Valera brought in really coercive measures they said nothing about it. Still they play politics in this House but I do not think the House will any longer allow them to play politics with the Home Secretary. I have never heard such rubbish as the hon. Member has uttered, and I am surprised that a young man of the hon. Member's age should be sitting here and talking such nonsense.

7.55 p.m.

Major Milner: I do not think the hon. Member for Antrim (Sir J. McConnell) was really entitled to launch the attack he did on the hon. Member for Barnstaple (Sir R. Acland), nor do I think the Home Secretary desired him to undertake the advocacy of his defence. Most hon. Members, including the hon. Member for Barnstaple, have a wholesome respect, not unmixed with admiration, for the great work the Home Secretary has undertaken during the past few months. He has had an extremely difficult job; it has been a complicated job and one of multifarious phases. I will not say that in every respect I agree with what he has done, but he has done an extremely difficult piece of work. It is all the more regrettable, therefore, that at times he should go a little bit off the rails.
I shall not go into the questions of aliens and refugees and so forth, where the Home Secretary has given way to a


good deal of clamour and even panic. Here again I think the right hon. Gentleman is doing something which is quite unnecessary. If it be necessary to make any change at all, there are other methods by which it could be achieved. I am quite sure that there is no one in this country who has not an aversion from the setting up of special courts for any purposes. Our courts have a long standing tradition and they have withstood the attacks of centuries. The one thing special courts lack are the safeguards which in a hundred and one directions are provided by our courts of law and these safeguards are the result of many years of sacrifice on the part of many people, and of accumulated experience. These safeguards in my experience are always absent in any special court which is established. I am not complacent or in the least satisfied with our present system of justice. I could offer a good many suggestions for improvement, but I think that wherever possible we should keep to our courts of law, our precedents, traditions and so forth, even in the midst of war.
The professed object of this Bill is to provide some middle way between handing the trial and punishment of certain offenders over to the military, on the one hand, and on the other leaving them to the civil court which might be difficult to convene during wartime. It seems unnecessary to set up special courts for that purpose. I should have thought it possible to pass an appropriate Bill or regulation, as the case may be, to enable judges of the High Court, who at present travel around various parts of our country, to sit, if necessary permanently, in certain districts. I imagine, for example, that 10 to 12 judges could keep station throughout the whole length and breadth of the land, in such a way that no one would have to travel more than 50 or 60 miles to reach them, and jurisdiction might be conferred on them, without the usual preliminary investigations before a court of summary jurisdiction. By that method the difficulty might be got over.
I am not prepared, however, even in the situation with which we are faced, to agree to a Bill which confers at some indefinite time, on some indefinite court, for some indefinite offences, the power to inflict the penalty of death without the

possibility of any review or appeal. I hope that the right hon. Gentleman will think fit to withdraw the Bill and to introduce it in some modified form. I am sure that he with his ingenuity and with the ingenuity of his officials can find a hundred and one ways of getting us out of our present difficulty. I have made one suggestion with regard to stationing of High Court judges, and I can imagine a number of other alternatives. It is not fair or reasonable to ask us to pass a Bill of this sort, in the indefinite terms in which this Measure is drawn. I am not prepared to vote for such a Bill, and I ask the right hon. Gentleman to withdraw it and bring forward such alternatives as will meet with the full support of the House. Unless he is prepared to do that, I shall not be willing to vote in favour of the Bill if there is a general feeling in the House that a Division should be taken.

8.2 p.m.

Sir Joseph Nall: My objection to the procedure and the administration of the law as proposed in this Bill is based on somewhat different grounds to the objections of some hon. Members who have spoken. I should not have risen but for the comments of my right hon. Friend the Member for Horsham (Earl Winterton), who suggested that if anybody did not like the Bill he was really preventing the arrest of Quislings, and so on. It is because the kind of procedure envisaged in the Bill may lead to many Quislings getting off scot free that I do not like it. I do not see any merit in the fact that these courts will be wholly civil; that rather detracts from their effectiveness. Nor do I see any merit in saying that the President will be some man learned in the law, for it may very well result in somebody getting off who ought to be dealt with summarily. I saw something of courts-martial in the last war and since then I have seen a good deal of Departmental inquiries, and it seems to me more likely, whatever the Home Secretary may have in mind, that, when it comes to the point of applying this Bill and the regulations behind it, it will not be the Home Secretary who will have the say in the appointment of the courts. In the stress of internal war an official in one of the regions will have the appointment, and so far from getting highly experienced learned judges of the High Court, and so on, we


shall get in charge of the courts Departmental officials who may very well fail to respond to the exigencies of the situation. The result will be that when the military authorities apprehend offenders who ought to be summarily dealt with, those offenders may very well get away, because the composition of the court is Weak and its members not alive to the real dangers that beset the locality. That is one objection.
The other objection is that, in this Bill, the Home Office is hugging too tightly its control over affairs. All along the line, in matters relating to internal security, one finds the various branches of the Home Office reluctant to allow any kind of function to be detached from that Department and handed over to another Department. One sees in this Bill not any real objection to the procedure of courts-martial in the military areas to which my hon. and gallant Friend the Member for Epsom (Sir A. Southby) referred; one sees in it that perpetual reluctance of the Home Office to allow one of its ordinary functions to be administered, even temporarily, by another Department. In the circumstances which may arise, and in which this Bill may have to operate, we cannot ride two horses. The urgent requirements of justice and summary jurisdiction may be such that we could not have two kinds of courts functioning. We could not have, as it were, a system dependent on the military for apprehending people who are doing Fifth Column work, and a weak court with some quasi-legal man in charge letting people off and failing to respond to the needs of the situation.
It seems to me that this Bill is the negation of the kind of firm authority and firm application of authority which is needed in the circumstances envisaged in the Preamble. For these reasons I think it is a bad Bill, that it is wrongly conceived, that it is wholly vague and that it may be misused. The powers which are given by it may be abused, not by my right hon. Friend while be is in charge of his Department, but in the regions, when authority is devolved in times of crisis. I suggest it would be much better to take the Bill back, to reconsider it and to bring forward a clear-cut proposition. The Government should put into the Bill the kind of court which

is envisaged and the circumstances in which it shall act; and apart from that, for the special conditions in the military zone they should provide that a properly constituted court-martial shall he allowed to function in the case of civilian offenders who need an immediate and summary trial. The summary trial, without any kind of review or confirmation, is wholly bad. No military court-martial has the final word in its findings. Whatever be the decisions of a court-martial, they are subject to revision by the higher authorities and subject to confirmation before any drastic penalty can be inflicted. The immediate infliction of a drastic penalty is not a matter of great moment, so long as a man is apprehended or is in custody. Whether sentence of death or imprisonment is carried out a day or a week after it has been passed is of no great moment, but there should be some gap during which the finding of the summary court will be reviewed by higher authority. In the case of penal servitude or the death penalty, the sentence ought to be subject to confirmation by a higher and more competent authority than the kind of court we shall get under this Bill.

8.9 p.m.

Mr. Ralph Etherton: The broad intentions of this Bill must command support and no hon. Member would desire to withhold from the Government necessary or essential powers. The sentiments expressed by the Minister for Home Security in each of his two speeches must also have commanded considerable support, but the one thing apparent from this Debate is that the Bill in its present form does not command the undivided support of the House. It is a Bill which establishes, without notice, an entirely new judicial procedure, a judicial procedure which is undefined, a judicial procedure which apparently has to be the subject of regulations, regulations which cannot be reviewed by this House but can only be accepted or rejected. In those circumstances I would ask the Minister to withdraw this Bill and bring forward a comprehensive Measure which sets out in detail the powers for which he is asking. It has been said by the Minister that various authorities, I think he said judicial as well as the military authorities, have been consulted. I wonder whether the Lord Chief Justice has been consulted. He, one knows, is


a great opponent of legislation by regulation, and that is what this Bill in fact effects. It is clearly bad that a completely new judicial system should be introduced in this way, and in view of the fact that the Bill clearly does not command the support of the House and of the fact that the Prime Minister has said that he is most anxious to carry this House of Commons with him at all stages of the present emergency; and further in view of the fact that with this Bill the right hon. Gentleman is clearly not carrying the undivided support of this House with him, I would ask him to reconsider the matter and to introduce at a later stage a Bill which, in fact, effects that which he is asking and which sets out in detail that which is intended.

8.13 p.m.

The Attorney-General: This country has had the good fortune not to have been invaded since 1066. We live in days when invasion, or rather an attempt at invasion, is an event which we have to contemplate, and we therefore have to consider whether special measures should be taken, and, if so, what special measures, for the punishment of offenders should such an invasion take place; not so much when the battle is actually raging but during the aftermath, when the invasion has been repelled, as it will be, but when conditions would be such that it would be impossible for the ordinary legal procedure to function, and it might be vital from the military point of view to have courts which are able to deal quickly and expeditiously with the most grave offences. The right hon. Gentleman the Member for Keighley (Mr. Lees-Smith), who spoke first, and the hon. Member for West Middlesbrough (Mr. K. Griffith) said that while my right hon. Friend had told them that he did not intend to set up courts-martial to try civilian offenders, yet powers were being taken under this Bill by which that result could be produced by regulations. My right hon. Friend met that point at an earlier stage in the Debate by saying that he would be willing to insert words to make it clear that that was not his intention. Later speakers have taken a different view. They have advocated courts-martial, have thought they were desirable, and have said that not only should this power be taken but that it should be exercised.
Two or three hon. and learned and gallant Gentleman referred to martial law, and it is almost impossible to avoid reference to martial law in a discussion of this subject; but as they will find out if they refresh their memories by reading the excellent introduction to the Manual of Military Law, the use of the phrase "martial law" is always apt to create confusion, because, as is pointed out there, it is used in two quite different senses, and I have on occasions found it used in a third and indeed in a fourth sense. It really does conduce to the clarity of discussion if one can avoid the use of that term, because it is never quite certain in what sense people are using it. What is usually referred to as martial law in this country is the common law power which the military forces of the Crown have to take all measures necessary to repel and deal with invasion or attack. They have the fullest power under the law to take all measures necessary for that purpose, and nothing in this Bill or in any regulations that will be made under it will limit that common law power, based on military needs and necessities. And, of course, that power includes the power, if circumstances make it necessary, to deal, and it may be to deal out of hand, with an obstructing civilian, or a traitorous civilian if he is obstructing military operations, or if he is found doing some of the acts which have been referred to in the course of the Debate. I want to make it clear that nothing in this Bill interferes with that general overriding necessary power, which I am sure has the approval of every Member on every side of the House.
What, then, is the problem with which the Bill and the regulations made under it seek to deal? As I have said, it does not arise in the immediate battle-area. When the guns are going off, when fighting is actually going on, there is no opportunity to apprehend people and deal with them by due process of law. It is the problem which may arise—and may not—not necessarily over the whole country but in certain areas, in the aftermath of an invasion or attempted invasion, when the enemy have been driven back but when there are small parties of men about. There may be disturbance and confusion, and it is vitally important that such of the population as are there should do nothing to impede operations, and should


realise that certain offences may carry the heaviest penalties, and there should be courts with power to deal with offenders, if any, and impose those penalties at once.
The point I want to make clear is that the military authorities themselves desire positively that there shall be courts of this kind available to assist them in dealing with the situation which may arise. It is not simply that they approve, but that they desire positively that there shall be courts such as this. I will deal a little later with the question as between the civil courts and the courts-martial, but it is surely an important point, in considering a Measure of this kind, whether the military authorities upon whom the responsibility rests think that it is desirable in the interest of the task which the country places upon them. The important thing, if you get offences of this kind by the civil population, is undoubtedly speed. That inevitably involves abrogating the normal procedure of this country regarding examination by committing magistrates, depositions, and all the rest of it. It is important that the procedure, though speedy, should preserve the essential elements of a trial and natural justice; a man must know what the charge is against him, and have a chance of dealing with it by preparing his defence and calling any evidence.
Most of the cases will be plain. They will be cases where the evidence will be clear and straightforward, and it is unlikely that the courts will be called upon to deal with cases which involve long hearings, doubtful evidence on one side or the other, masses of witnesses and so on. It is important also that the courts should have power to impose the full penalties which may be imposed under the law. More than one hon. Gentleman has spoken as though the courts to be set up by regulation under the Bill might create new offences. That is, of course, quite untrue. [An HON. MEMBER: "The regulations do so."] The regulations can do so to-day. They have been creating fresh offences at the rate of at least one a week for the last few months.

Sir R. Acland: The Government are creating new offences which they can try by the courts which they are setting up.

The Attorney-General: These courts have to administer the law of the land.
The hon. and gallant Member for East Nottingham (Captain Gluckstein) seemed to think that there was some great anomaly in having court, to deal with offences which were being dealt with by other courts. There is surely no anomaly. The same offences can be dealt with to-day summarily, by quarter sessions or at the assizes. So far as sentences are concerned, judges may have different ideas as to the proper sentences. It is perfectly well known that, how ever you try to get sentences roughly equal, courts continue to deal out different sentences.

Captain Gluckstein: Does the right hon. and learned Gentleman mean that offences are created under these regulations which will be dealt with—

The Attorney-General: That is a misunderstanding which I desire to remove. There will not be offences created under these regulations.

Captain Gluckstein: Surely the right hon. and learned Gentleman must be wrong. Perhaps he would look at paragraph (a) which reads:
for the apprehension trial and punishment of persons offending against the regulations.

The Attorney-General: That means the Defence Regulations.

Mr. Silverman: It does not say so.

The Attorney-General: This was inserted in the original Act. The substance of the law will be found in the main body of the Defence Regulations under the principal Act. The only regulations which will be made under the power conferred by the Bill will be procedure regulations, providing for the special courts.

Sir A. Southby: Surely the difference between these courts, when they are set up in one part of the country, and the courts existing under the old procedure, will be that, in one court there will be a right of appeal for a given offence, and in the other, no right of appeal, which will mean that the citizen will be treated in one way in one part of the country and in another way in another part of the country for the same offence.

The Attorney-General: So it may, if you have courts-martial.

Sir A. Southby: There is a normal right of appeal.

The Attorney-General: Yes, but the case would not be dealt with in the same way.

Mr. Silverman: The hon. and gallant Gentleman is dealing with the question of whether there would not be an anomaly if fundamentally different penalties were attached by these courts to these offences from what were attached by the normal courts. We see that, in the normal courts, penalties may differ, but those normal courts are prevented, to a degree, from wide differentiations of that kind. The normal courts sit in public and there is constant public criticism.

The Attorney-General: So will these.

Mr. Silverman: It does not say so. There is a right of appeal which, by this Bill, is expressly lifted. Courts-martial have a power behind them which does not exist under the Bill.

The Attorney-General: I was merely pointing out as a preliminary that you have the anomaly, if it is an anomaly, of different courts at present. There will be not only no right of appeal from these courts but there will be no jury. The justification is the situation in which the power is to be used. It cannot be stated too forcibly that that is the point which this House has to face. Something may happen which has not happened here for 1,000 years and which will present special problems. The military may require certain courses to be taken with speed and expedition, at the time of an offence which, if unpunished, may impede military operations which everybody wants to help.
Having reached the point that the military authorities, for reasons which I have given, require a court of this kind as part of the machine which should operate in areas, in these conditions, we are then faced with the question, Should they be civil courts or courts-martial, or courts in the nature of courts-martial? That matter has received very full and careful discussion. Some hon. Members have stated that the Bill ought to have been brought forward sooner, because the possibility of invasion, or circumstances in which invasion would become possible, have been with us for some time. That is true, of course, but it is also true that this is not the only problem which has been created by the circumstances. I can

assure hon. Gentlemen in all quarters of the House that we have not just sat doing nothing about this problem. It has been the subject of very careful discussion. It was important that steps be taken, as they have been, to get the views of the military authorities on what procedure they thought would help them most, and, considering them in the light of other considerations, to decide whether that was a procedure which, as a whole, the Government could recommend to the House. The military authorities, of course, had a great many things to do. I can tell the House that the military authorities do not desire to deal with civil offenders by courts-martial or courts in the nature of courts-martial. That is their considered view after very full consideration of the issues involved in one way or the other. They desire speedy courts, but they do not desire that civil offenders should be dealt with by courts-martial. One of the reasons, no doubt, is that referred to by my hon. Friend the Member for Abingdon (Sir R. Glyn), that you do not want to take serving officers away from normal military duties more than is necessary, and I think that the conception of officers who would not, in fact, be serving officers but who would be lawyers, who would put on uniform with no idea of serving in the field, was not an idea which commended itself to the House, and it certainly does not commend itself to the military authorities.

Captain Gluckstein: I hope I may be allowed to say that the idea does not commend itself to me, and I did not put it forward. What I suggested was that there must be a number of ex-service officers who are competent to sit upon such tribunals, having experience as soldiers and of courts-martial. I do not suggest for a moment that you should take lawyers, dress them up as soldiers and pretend that they are officers, although, as the right hon. and learned Gentleman knows, it has been done.

The Attorney-General: I misunderstood the hon. and gallant Gentleman. A court-martial, of course, is not a very speedy procedure, and that I think is one reason why it was not thought very appropriate for this particular problem. That being so, the court-martial being ruled out and speed being of the essence of the solution to the problem, it was felt that the best solution was to have a special civil

>
court and to man it with the highest judicial talent available for this special work.
The other point which was raised was the suggestion that instead of this being dealt with by regulations we should produce a sort of Judicature Act for these special courts. No doubt, that may have its attractions to some people, but I am afraid it is really impracticable. After all, when this House passed the original Emergency Powers (Defence) Act, it recognised, and recognised, if I may say so with all respect, in its wisdom, that under war conditions you need a rapid legislative machine, and it obtained its ultimate control by ensuring that regulations are laid upon the Table. They can be discussed; the Government have to bow to the opinion of the majority of this House. But if ever there was a matter which demanded the speed and elasticity which the regulation-making method provides, I should have thought that it was the setting-up of courts to deal with this problem. My right hon. Friend this afternoon gave to the House a general indication of what he had in mind. He undertook to discuss with those particularly interested in this matter, representing different sections of opinion, the provisions or any special provisions, in which they were interested or on which they held strong views. I hope that the House may now give this Bill a Second Reading.

Mr. Stephen: What about the right of appeal?

The Attorney-General: My right hon. Friend said that that was under the regulations and not in the Bill. There may be circumstances in which it is unnecessary to have an appeal. After all, there was no right of appeal in this country until 25 years ago. [An HON. MEMBER: "And what a mess they made of it."] I do not agree. For centuries, until 1912 there was no appeal in criminal cases, and as regards Scotland there was no appeal until 1927. Scotland lagged behind. You may get a state of affairs in war-time in which it is necessary that penalties should be imposed, and imposed without appeal. It arises under the regulations and not in the Bill, and it comes within the general scope of my right hon. Friend's undertaking that, subject to there being no delay, he will do all he can to discuss any points which are raised. This Bill

is the result of a great deal of discussion. It is the solution to a problem which certainly needs a solution. We believe it to be on the right lines, and we believe that the form which my right hon. Friend has adumbrated is the best form to meet the requirements of the military and of the public.

8.38 p.m.

Dr. Little: After the able speeches which we have heard from the Minister of Home Security and the Attorney-General, I think nothing more need be said. I am reminded of the old Scottish lady and the minister who, in the course of his sermon, said: "What more need I say?" and she said: "Say 'Amen' and sit down." I feel something like that. I regret the turn which this Debate has taken. To me there has been something unreal and depressing in the Debate at a time when, as a nation, we are engaged in such a herculean struggle with our enemies. One would think we were living in the piping days of peace, and not faced with a life-and death struggle. It is very little that the Minister of Home Security is asking from us for the safety of our country.
I rise not to make a speech but to ask the Minister of Home Security a question concerning the application of this Bill. I want to know whether the Bill will apply to the whole of the United Kingdom—in short, will Northern Ireland come within the ambit of the Bill?

8.40 p.m.

Mr. Lees-Smith: At the opening of the Debate I said that, so far—

Mr. Deputy-Speaker (Colonel Clifton Brown): The right hon. Member is speaking by leave of the House, I understand.

Mr. Lees-Smith: With the leave of the House, I wish to say only that at the opening of the Debate I pointed out that my hon. Friends were satisfied with the general intention of the Bill, and with the intention of substituting, so far as possible, civil courts for military courts. I referred to many omissions from the Bill, and I have taken note of the reply of the Minister of Home Security that he would endeavour to find words to include, at any rate, the main points that I suggested. I hope that he will do that after consultation with different sections of


opinion, and that he will also take into account the views of different sections with regard to the regulations, as he did on a previous occasion. On that understanding, I shall not invite my hon. Friends to make any difficulty about the passage of the, Second Reading of the Bill.

Question put, "That the Bill be now recd a Second time."

Mr. DEPUTY-SPEAKER collected the voices, and declared that the "Ayes" had it.

Mr. J. P. L. Thomas: rose

Hon. Members: No.

Mr. Deputy-Speaker: I had called upon the hon. Member before hon. Members said "No."

Hon. Members: No.

Mr. Deputy-Speaker: I listened carefully for the voices saying "No" before I declared that the "Ayes" had it.

Mr. Silverman: I assure you, Sir, that as soon as the "Noes" were called for. I said "No" as loudly as I could, and other hon. Members around me did so, too.

Mr. Deputy-Speaker: Hon. Members did not make themselves clearly heard. I had declared that the "Ayes" had it.

Sir R. Acland: With great respect, this must be contrary to all the procedure of this House. We are entitled either to a Division or to be called upon to rise in our places.

Mr. Deputy-Speaker: If the hon. Member has any objection to my Ruling, he can always put down a Motion- on the Order Paper.

Motion made, and Question put, "That the Bill be committed to a Committee of the Whole House."—[Mr. J. P. L. Thomas.]

The House divided: Ayes, 124: Noes, 16.

Division No. 63.]
AYES.
[8.45 p.m.


Albery, Sir Irving
Headlam, Lieut.-Col. Sir C. M.
Quibell, D. J. K.


Ammon, C. G.
Hely-Hutchinson, M. R.
Raikes, H. V. A. M.


Anderson, Rt. Hn. Sir J. (So'h Univ's)
Henderson, J. J. Craik (Leeds, N.E.)
Ramsbotham, Rt. Hon. H,


Aske, Sir R. W.
Holdsworth, H.
Ramsden, Sir E,


Attlee, Rt. Hon. C. R.
Hopkinson, A.
Rankin, Sir R.


Balfour, Capt. H. H. (Isle of Tha[...]st)
Isaacs, G. A.
Reed, Sir H. S. (Aylesbury)


Beamish, Rear-Admiral T. P. H.
Jackson, W. F.
Reid, W. Allan (Derby)


Beaumont, H. (Batley)
Jenkins, A. (Pontypool)
Rickards, G. W. (Skipton)


Blair, Sir R.
Jones, Sir G. W. H. (S'k N'w'gt'n)
Ridley, G.


Boulton, W. W.
Jones, L. (Swansea W.)
Ritson, J.


Broadbridge, Sir G. T.
Jowitt, Rt. Hon. Sir W. A.
Robinson, W. A. (St. Helens)


Bromfield, W.
Keeling, E, H.
Salt, E. W.


Brooke, H. (Lewisham, W.)
Kennedy, Rt. Hon. T.
Samuel, M. R. A.


Burke, W. A.
King-Hall, Commander W. S. R.
Sanderson, Sir F. B.


Butcher, H. W.
Lamb, Sir J. O.
Seely, Sir H. M.


Chapman, A. (Rutherglen)
Law, R. K. (Hull, S.W.)
Selley, H. R.


Christie, J. A.
Lee, F.
Shepperson, Sir E. W.


Cook, Sir T. R. A. M. (Norfolk, N.)
Little, Dr. J. (Down)
Sinclair, Rt. Hon. Sir A. (C'thn'a)


Cooper, Rt. Hon. T. M. (E'burgh, W.)
Logan, D. G.
Smith, Sir R. W. (Aberdeen)


Crooke, Sir J. Smedley
Lucas, Major Sir J. M.
Somervell, Rt. Hon. Sir Donald


Crookshank, Capt. Rt. Hon. H. F. C.
MacAndrew, Colonel Sir C. G.
Storey, S.


Dalton, H.
M'Connell, Sir J.
Strauss, H. G. (Norwich)


Dobbie, W.
Macdonald, G. (Ince)
Strickland, Captain W. F.


Edwards, Sir C. (Bedwellty)
McEwen, Capt, J. H. F.
Stuart, Rt. Hon. J. (Moray and Nairn)


Erskine-Hill, A. G.
Macmillan, H. (Stockton-on-Taes)
Sutcliffe, H.


Erskine, Lord
Magnay, T.
Tinker, J. J.


Foot, D. M.
Maitland, Sir Adam
Tomlinson, G.


Frankel, D.
Mander, G. le M.
Turton, R. H.


Fraser, Captain Sir Ian
Margesson, Capt. Rt. Hon. H. D. R.
Wakefield, W. W.


Fyfe, D. P. M.
Mathers, G.
Watson, W. McL.


George, Major G. Lloyd (Pembroke)
Mitcheson, Sir G. G.
Westwood, J.


Gibbins, J.
Montague, F.
Whitaley, W. (Blaydon)


Gibson, R. (Greenock)
Morris, J. P. (Salford, N.)
Williams, E. J. (Ogmore)


Glyn, Major Sir R. G. C.
Morris-Jones, Sir Henry
Wilmot, John


Granville, E. L.
Mort, D. L.
Winterton, Rt. Hon. Earl


Griffiths, J. (Llanelly)
Munro, P.
Womersley, Sir W. J.


Grimston, R. V.
Nield, B. E.
Woods, G. S. (Finsbury)


Guest, Lieut.-Colonel H. (Drake)
Paling, W.
Woolley, W. E.


Gunston, Capt. Sir D. W.
Peake, O.
TELLERS FOR THE AYES.—


Hall, G. H. (Aberdare)
Petherick, M.
Major Sir James Edmondson


Hammersley, S. S.
Pickthorn, K. W. M.
and Mr. J. P. L. Thomas.


Hannah, I. C.
Ponsonby, Col. C. E.



Harbord, Sir A.
Price, M. P.





Bevan, A.
Lunn, W.
Stephen, C.


Daggar, G.
Maxton, J.
Stokes, R. R.


Gluokstein, L. H.
Naylor, T. E,
Viant, S. P.


Hall, W. G. (Coilns Valley)
Owen, Major G.
Wilson, C. H. (Attereliffe>


Harvey, T. E.
Shinwell, E.
TELLERS FOR THE NOES.—


Horabin, T. L.
Sorensen, R. W.
Sir R. Acland and Mr. Silverman.


Question, "That this House do now adjourn," put, and agreed to.

Bill accordingly committed to a Committee of the Whole House for Tomorrow.

Orders of the Day — CONSOLIDATED FUND (No. 2) BILL.

Considered in Committee.

(Colonel CLIFTON BROWN in the Chair.)

CLAUS 1.—(Issue of £1,000,000,000 out of the Consolidated Fund for the service of the year ending 31st March, 1941.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.51 p.m.

Mr. Tinker: I wish to take this opportunity of raising a point which, I think, I am entitled to raise under the provisions of this Measure. I want to air views with regard to the Royal Parks, because I understand that money is voted out of this Fund for the upkeep of the Royal Parks.

The Deputy-Chairman: I am afraid that details of this kind cannot be mentioned on the Committee stage of the Consolidated Fund Bill, which has nothing at all to do with these matters.

Mr. Tinker: One wonders where one is getting, because I am told that on the Consolidated Fund Bill we can raise anything to which we give money. If that is so, surely I can deal with this matter. Last week I was put off, and now, on a Measure on which I am told anything can be raised, I cannot do it. Will you tell me, Colonel Clifton Brown, where I can do it?

The Deputy-Chairman: On the Third Reading of the Bill one can raise a good deal, and I think that that can be the opportunity.
Question, "That the Clause stand part of the Bill," put, and agreed to.

Clauses 2 and 3 ordered to stand part of the Bill.

Bill reported, without Amendment.

Motion made, and Question proposed, "That the Bill be now read the Third time."

8.54 P.m.

Mr. Tinker: I think the House will be interested when they hear what I want to bring forward. In peace-time the Royal Parks serve the purpose of recreation of the people and afford pleasure to them in viewing the beautiful surroundings and the laid-out flower beds, and they enjoy the bands playing in the parks. Now we have passed to a grimmer period in which it is recognised that all available spaces should be utilised for the purpose of providing food. There is a lot of open ground in the Royal Parks which could be turned to better advantage and be of more use to the nation than is the case at the present time. I want to show how it can be done.
Last week, when dealing with the Vote for the Ministry of Agriculture, my hon. Friend the Member for North Tottenham (Mr. R. C. Morrison) mentioned in connection with salvage, the collection of waste food in his locality, and said they were thus able to provide a lot of food for pigs, and that they were keeping a number of pigs, which they intended to put into the parks at their disposal. That is a very wise suggestion indeed, and it has occurred to me that if that can be done in one part of London, it could be done in other parts of London, and even if the Royal Parks could not be used for that purpose they could be turned into allotments. I sometimes walk through the Royal Parks and see numbers of men employed doing work, which I think ought not to be done at the present time. In Kensington Gardens there is a sunken garden around which there is a very fine bower of trees, in the form of an avenue, and last week and the week before, four men were engaged cutting off the leaves which would in course of time fall off themselves. They were spending their time in trimming up the trees at a time of urgent national necessity and there was no necessity at all for it. There is Rotten Row, in Hyde Park, a long avenue, where those who


own horses exercise them. I expect that that sort of thing is to be kept up and therefore it will take another set of men to look after it.
At a time like this there is no need for anything like that, and men who are being employed for that purpose could better he engaged in other directions. Much of the space in the Royal Parks could be devoted to the growing of foodstuffs for the benefit of the people. If before very long we are in dire need of food, now is the time to take every advantage of making use of every piece of available space. I think the lesson would be a good one, if people who visited London went to the Royal Parks and saw that they were being turned to a useful purpose. They would go back to the country and say that they had seen evidence of the determination of the nation to prosecute the war because the Royal Parks had been turned into something more useful. I make this suggestion to the House in the hope that it may he brought to the attention of the First Commissioner of Works and those who are responsible. I do not know whether the thought has crossed his mind to do what I am asking him to do, and if it has not, I hope that what I am saying here to-night will cause him to think whether something on these lines cannot be done. That is why I have taken this opportunity of raising the question in the hope that the House of Commons may decide what ought to be done.

8.59 p.m.

The Financial Secretary to the Treasury (Captain Crookshank): It is not my business to say how far the hon. Gentleman has been within the terms of the Vote of Credit. This Consolidated Fund Bill is necessary for the £1,000,000,000 Vote of Credit, which is merely for war purposes, but what he has said sounds as though the things that he has in mind are not specifically for war purposes.

Mr. Tinker: Yes, they are.

Captain Crookshank: The hon. Gentleman has made his protest. I do not represent the Office of Works in this House—and I presume the hon. Gentleman did not give notice to my hon. Friend, otherwise he would have been here—but I will see to it that my hon.
Friend is informed of the hon. Gentleman's views. I hope that will satisfy him. I am not in a position to say whether so many men are or are not employed on these particular purposes, but there is the other side of the picture. The parks are used by a great number of people, even in war time, for walking and recreational purposes, and one has to put that in the balance as the value which might accrue to the State for not developing them in the ordinary way. As I have said, I will inform my hon. Friend of the hon. Gentleman's views, although I do not think that they have anything to do with this Bill.

EMERGENCY POWERS (DEFENCE) ACT, 1939.

TIMBER (CHARGES) (NO. I) ORDER, 1940.

9.2 p.m.

The Parliamentary Secretary to the Ministry of Supply (Mr. Harold Macmillan): I beg to move,
That the Timber (Charges) (No. I) Order, 1940, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which was presented to this House on 4th July, be approved.
This Order is asking the House to confirm an Order which was made before it on 4th July, and very briefly I will explain its purpose to the House. At the beginning of the war maximum prices were fixed for existing timber stocks. These are ordinarily called opening stocks, Since the war began the import of. timber has been on Government account, and the prices which have had to be paid, partly owing to the fallen exchange and partly to increase of freight, were naturally higher than the prices ruling before the war. Now we have reached the point when the opening stocks—that is, the stocks which existed at the beginning of the war—have been so far encroached upon that they are coming to an end, and it is necessary to sell, and make use of, stocks of timber imported by the Government since the war. It is necessary, therefore, to raise the price of timber in order to recoup the Treasury for the extra cost of post-war imported timber.
At the same time it is inconvenient to have two prices, namely, the price for
opening stocks and the price for national stocks, and there were two courses open to us. One was to requisition all that remained of the opening stocks, which would be a complicated transaction involving the valuation of each particular item of stock, which are widely held and cover a wide raneg, and the alternative was to put an additional charge upon the remaining parts of the pre-war stocks corresponding to their increased value. That is really what this Order does. Obviously it would be unfair if people who happened to own stocks obtained the advantage of additional profit caused by increased cost since the war. Therefore, in order to strengthen the position between post-war and pre-war stocks, there is an additional charge put on stocks held before the war began, and the extra cost of post-war importation is spread by making some increase of price to pre-war holders. This evens up the advantage of pre-war stocks with the disadvantage of the more expensive stocks we have had to purchase since the war began, and it evens it out in a way by which no chance of war profit could accrue to the holder of any particular stock. The machinery by which this is done is twofold. With regard to the general sale or purchase of timber, there is a general charge and that is recovered, with certain exceptions of which I will give the details if I am asked. The sum that it is expected to recover from the general charge is about £3,000,000. This will be used partly to pay the cost of the new importations and some of it will be placed to reserve.
The only exception to the general charge, put on the sale of timber generally is that it is a different procedure which is to be used in respect of timber sold for pit props. In that case, instead of the charge being put upon the actual timber sold, there is to be a charge of 4d. per ton on the coal. It is merely regarded as a more convenient method of spreading the charge in that case that it should be raised upon the coal tonnage rather than by spreading it on the actual timber used for pit props. In the same way as ordinary timber, there are at the moment two classes of timber which are being used for pit props. One is that imported from abroad and the other is the pit props which we get from home production. The cost of the foreign imports is substantially higher than of home-produced pit

props. The purpose of the Order is, first, to make some evening up as between the foreign and the home-produced and, secondly, to even up the price regardless of the cost of transport, so that the price of pit props is the same without regard to the place from which it has been transported. That is in order to allow us to get timber from distant parts of the country which, from an economic point of view, would be very expensive to transport and yet which in war-time it may be wise to use. The purpose of the levy is to finance a fund to even out the charges. So far as the levying is upon the coal rather than upon timber used for pit props, this matter has been agreed both with the mine owners and the Mine Workers' Federation. I hope with this explanation the House will be prepared to pass the Order.

9.9 p.m.

Mr. Gordon MacDonald: There are a few comments which we who are interested in the mines from the workers' side desire to make. The hon. Gentleman emphasised that this is the result of consultation with the Mineworkers' Federation and the Mining Association. I should like him to tell us whether he knows to what extent the Mineworkers' Federation were consulted. I understand that the consultation took place almost entirely with the Mining Association and, having come to an agreement with them, the Mineworkers' Federation were informed of what had happened and asked whether they had any objections to it. If in future there should be need of negotiations of this kind, I hope the Government will consult in the same way with both sides of the industry. We made a complaint about a fortnight ago to the Chancellor of the Exchequer, who pursued the very same course. After all, the two sides in this industry are equally important, and it is not fair to take consultations with one side and ask the other side in an off-hand manner, "What do you say about this?" This placing of 4d. a ton on every ton produced in this country directly affects the workers.
Our method of determining wages and profits is one in which every penny and every ton is taken into consideration. We are told that this Order means £3,000,000. Last Saturday, in Lancashire, I asked what it meant for Lancashire, and I was told that it meant about £210,000. I


then asked our accountant what that would mean in percentages with regard to wages, and he told me about £182,000, which means almost 3d. in wages for every day worked. If this levy were not imposed, every colliery worker in Lancashire would receive, provided we were above the minimum, an advance of 3d. a day in wages. I know we shall be told that provision was made for this beforehand. In May, and earlier, when we were discussing wages, it was suggested that provision should be made for this, as it would be coming along. As the war develops, an enormous amount of materials will be needed and coal will become scarcer. The Mineworkers' Confederation approve whole-heartedly of the pooling of this cost. It is the right thing to do. We do not think that some colliery companies should get an advantage over others, and in so far as this Order evens out things, we accept it; but I want to emphasise that in these matters, where the interests of the mineworkers are concerned, they ought to be consulted, not in any offhand way, but in the same way as the owners.

9.12 p.m.

Mr. Price: I should like to have some elucidation of one point concerning the charges on timber. I understand there is to be a charge put on all pre-war stocks in order that the owners of those stocks shall not obtain an increased profit as a result of the increased price. Will the charge be equal to the increase in price? Will it be like a duty which will skim off the whole of the increased profit that will come to the owners of that timber as a result of the increase in price, or will it be a percentage of it? When the war began, prices were fixed by the Timber Control. The owners of the stocks existing at that time experienced a certain rise in price over what they had already been charging. If on top of this there is to be an increase as a result of this new fixing of prices, I am inclined to think that, although it is true there is not a very large amount of the stocks left, the size of the profit will be rather considerable. Therefore, I should be glad if the Minister could give us some idea as to what the amount of the new charge is to be.

Mr. Harold Macmillan: The amount of the charge will be the amount represented by the difference between the maxi-

mum prices ruling before 1st July and the new prices fixed by the Order at which the Timber Control are selling the national stocks of imported timber.

9.15 p.m.

Mr. Tinker: Will the Minister tell us how long this charge will continue and the approximate amount it is expected to yield, because the mine workers are very anxious to know? I think it is the fairest method, but a little more openness would better obtain the confidence of the workers. No one seems to know how it came about, and yet there was a charge levied, and we who represented the workers did not know what had happened; consequently one felt aggrieved about it. I hope that the Minister will try to make these matters clearer in future, thereby avoiding a good deal of trouble.

9.16 p.m.

Mr. James Griffiths: It is very essential in these days, when we desire to have the full co-operation of everyone in industry, that the men should be treated as partners. The other day we had some controversy with the Chancellor of the Exchequer about the same point. I urge upon the Minister and upon all Departments that in these days, if they wish to carry the full support of the workers, there should be consultations and not perfunctory statements that this or that has been done. In all their dealings with miners and other sections of workers it is of the greatest importance that the Departments concerned should give the workers a feeling that they are full partners and not just Cinderellas.

Resolved,
That the Timber (Charges) (No. 1) Order, 1940, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which was presented to this House on 4th July, be approved.

SULPHATE OF AMMONIA (CHARGES) (No. 1) ORDER, 1940.

9.17 p.m.

Mr. Harold Macmillan: I beg to move,
That the Sulphate of Ammonia (Charges) (No. 1) Order, 1940, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which was presented to this House on 10th July, be approved.


Before the war sulphate of ammonia, whether produced from the products of gas-works or coke companies or from other home sources, was sold through the British Sulphate of Ammonia Federation. In that way a uniform delivery price was arranged, so that without regard to distance from the source of production a uniform delivery price was quoted at any railway station. Since the war that price has been fixed, not by the Federation, but by the Minister of Supply, and in fixing the price regard has been had to wages and so forth. This Order secures that the uniform delivery price shall continue. Owing to various circumstances which have arisen it may be necessary to send this material longer distances. Therefore, it is intended to retain the uniform delivery price, and by arrangement between the Ministry of Agriculture and the Ministry of Supply the machinery laid down in this Order is for that purpose. An additional sum is also to be paid in order to cover certain reserves. We thus do something similar to what we did in the last Order. We determine the carriage by adding a fixed sum to be levied in accordance with the tonnage sent. In calculating the sum we had regard to freight and to what might be called a "contingency reserve." The only additional point I would like to make clear is that since the war the cost of the by-product part of the industry has risen very considerably. The cost of imported acid making material and other costs have risen to a greater extent in that part of the industry which is based upon the by-product than in that part which is based upon atmospheric nitrogen. The synthetic makers do not wish to make an additional profit out of the revised price and have agreed voluntarily to surrender any additional profit accruing to them. That extra profit will be put into the fund in order to reduce the price accordingly.

Resolved,
That the Sulphate of Ammonia (Charges) (No. 1) Order, 1940, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which was presented to this House on 10th July, be approved.

LAW REFORM (MISCELLANEOUS PROVISIONS) (SCOTLAND) BILL [Lords].

Considered in Committee.

[Colonel CLIFTON BROWN. in the Chair.]

Clause 1 ordered to stand part of the Bill.

CLAUSE 2.—(Amendment of the law as to damages or solatium for death of relative.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

9.22 p.m.

Mr. Robert Gibson: Before we part with this Clause something should be said about it because the change that it makes in the law of Scotland is pretty wide. The learned Solicitor-General for Scotland, in his speech on the Second Reading, said with regard to this Clause:
We think it right that in this matter adopted children, and for that matter illegitimate children also, should have the same right of recourse to the court for damages as the ordinary legitimate child has to-day."[OFFICIAL REPORT, 10th July, 1940; col. 1197, Vol. 362.]
In view of that statement I felt it my duty to examine Clause 2 in order that it might be clear what was the change that was being made in the law of Scotland as regards the position of adopted children particularly. In the end, the learned Solicitor-General conceded that the rights that accrue under this Clause with regard to the adopted child are reciprocal. The adopted child has the right to damages and solatium in the event of the death of the adoptive parent and the adoptive parent has the right to damages and solatium in the event of the death of the adopted child. That was not the case, however, with regard to the illegitimate child. Clause 2 specifically gives to the illegitimate child only the right to recover damages or solatium in respect of the death of either of his parents in the same way as if the child were legitimate. No corresponding right is given to the adoptive parent. Accordingly, while there are reciprocal rights created by this Clause in the case of the adopted child, there are no reciprocal rights in the case of the illegitimate child. The right is only in the child in the event of the death of the parent.
Over the week-end I have had the opportunity of speaking with various


people in Scotland, and I have found pretty widespread surprise in Scotland at this inequality of treatment of the adopted child in the one case, and the illegitimate child in the other. That surprise was expressed both by members of the general public and members of the legal profession. Legal adoption is a creature of statute, as far as Scotland is concerned, and is a recent thing, so recent, in fact, that the legal profession in Scotland has not yet quite accommodated itself to the change in the law. It may be rather surprising for the Committee to learn that about a month ago I was asked to advise upon an offer in a case in court. The offer was to an adopted child who was seeking damages in respect of the death of an adoptive parent. I had to refresh my memory with regard to the Act that owes its being to the work of my hon. Friend the Member for Linlithgow (Mr. Mathers), and it was a clear inference from the Act that the adopted child had no claim in law to damages or solatium, and I had not the slightest hesitation in advising that the offer that had been made be at once accepted, before the other side discovered that they were making an offer where there was no real claim in law. This Clause, as far as the adopted child is concerned, must be a matter of very great satisfaction to my hon. Friend the Member for Linlithgow. It carries a stage further the work that he did, but it leaves the matter of the rights of succession of an adopted child with regard to the estate of adoptive parents, and vice versa, to be dealt with in future legislation and one may hope that that stage will be reached quite soon. Bit by bit we are assimilating the position of the adopted child to that of the child born in lawful marriage.
I think that before we leave this Clause it is right and proper that we should pay a tribute to the members of the Faculty of Advocates of a generation ago, who fought hard for rights for the illegitimate child. That was not a popular fight in view of the judicial opinion held at that time. The fight at one stage was successful up to a point. In 1886 a decision was obtained from the Second Division of the Court of Session in virtue of which an illegitimate child was held liable to support the mother. Hitherto, there had been only an obligation on the part of the parent to support the illegitimate child. But that victory did not last very long. In consequence of that

victory an effort was made to obtain from the court a decision that the mother of an illegitimate child had a right to damages and solatium in respect of the death of her illegitimate son who had been supporting her, and that fight was carried to the House of Lords. The decision in the House of Lords in 1890 was very strong and in no mild terms at all. Scotland was told very emphatically the legal position of illegitimate children, according to the law of Scotland. The harshness and the severity of the common law were declared very clearly. Illegitimate children were described as bastards and the bastard was, at common law, a filius nullius, the son or the daughter of nobody. While it was said that a bastard—using that term again—had a mother but not a father, yet in law he had no rights at all in, relation to the parents. It was said, emphatically, that it was the purpose of the law to discourage the illigitimate child altogether.
The harshness of that decision was apparent to the outside world. In this branch of the law we owe a great deal to the humanising influence of the Workmen's Compensation Act. The Committee will recall that the first Act of 1897 gave, when a workman died as the result of an accident arising out of and in the course of his employment, a right to workmen's compensation, as far as Scotland was concerned, to those persons who, at common law, had a right to sue for damages for solatium, in respect of the death of that workman. The law was again tested in 1899 on that point, and a case was brought in Dundee, where a worker in a mill there died and left an illegitimate child. It was sought to recover workmen's compensation for the illegitimate child in respect of the death of the mother who had been supporting the child. The case came on appeal to Edinburgh and the Court of Session again was peremptory in refusing the claim, Lord Trayner used exactly the words which I used during the Second Reading, in giving his judgment. He said that there was no reciprocal right of support between the mother and the child. In the House of Lords in 1890, the decision of the Court of Session in the 1886 case had been expressly disapproved and, accordingly, it could no longer be said that the illegitimate child was under an obligation to support the mother.
During the discussion in the workmen's compensation case in the Court of Session in 1899, there was evidence of very considerable research into the law of Scotland. The court was informed of a decision away back in 1542, where, under the old law of Scotland, dealing with an action for assythment, an illegitimate child had been found entitled to damages. This showed clearly that, in the course of years, the position of the illegitimate child had deteriorated under our Scots law. It was in the working of the workmen's compensation law that the need for a change was felt. When the new Act was passed in 1906, the right to workmen's compensation was given to the dependants of the deceased workmen, and the right of an illegitimate child was specifically recognised. Surprise, as I have said, has been expressed by members of the Faculty of Advocates that there are no reciprocal rights in this Bill in the case of illegitimate children and the parents. The committee of the Faculty of Advocates, which first investigated this question, reported in favour of giving reciprocal rights in the case of the illegitimate child. I was so informed on Saturday in Scotland. The recommendations appear to have gone to other quarters and were never returned to the committee which drafted the Bill in its original form. For that reason there was surprise that changes had been made elsewhere—I do not know by whom or in what circumstances or for what reason—but the first intimation received by those to whom I spoke, was from the report of the Second Reading Debate in this House.
There is another reason for regretting that there is no reciprocal right for damages in the case of the illegitimate child. It is that there has been created, as the result of the Marriage (Scotland) Act which the House passed last year a new class of illegitimate children. I think I am right in describing these as statutory illegitimate children. It is in consequence of the statute that they are illegitimate. The mother may not have the child declared legitimate. That right to declare a child legitimate was a very great benefit during the last war, and as the days go on during the present war, the taking away of that right from the woman to whom a soldier who has died for his country, would have been, married had he lived, may well become

more and more marked and serious. In the case of the adopted child, there is no tie of relationship at all between the child and the adoptive parent, but in the case of the illegitimate child there is a very strong tie—a tie of nature—and the affection which the mother has for that child may be all the greater and all the stronger because of the obloquy which she has to bear in the eyes of the world. The child is her solace. But under This amending Act, she is denied the right to damages and solatium when that child dies, and though in the days to come she might have been supported by that child, the courts in Scotland, even after this Act is passed, will refuse to the mother of such a child damages and solatium, just as the House of Lords declared in the year 1890. Regret has been expressed in Scotland that this Bill does not afford to a sister a right to damages and solatium in the event of the death of the brother who has been supporting her. We have in other branches of the law recognition of that attachment between brother and sister. Where a sister is acting as housekeeper to the brother, the brother gets relief to a certain extent, in respect of Income Tax. Young solicitors beginning practice are appalled to find that in actual practice such a woman—a sister—who has been acting as housekeeper to a brother has not that right to damages and solatium.
We have other influences at work—influences that are humanising and taking away the harshness of the common law. We find that in connection with allowances to a soldier. I have to bear witness to the very powerful assistance that I have received in this matter from my hon. Friend the Member for Gorbals (Mr. Buchanan). His knowledge of the life of the working-people of our country has been very effective in procuring changes with regard to these allowances. As a result of the social legislation dealing with national health insurance, unemployment assurance and kindred topics influences are being brought to bear on this branch of the law, and I hope that it will not be long before a further extension of the law is made, that these new Tights which are being conferred to a certain extent in Clause 2, will be yet further widened, for the benefit of those who stand in need, and that there will be a further recognition in this way of the work that has been done since the eighties of the last century.

Clauses 3 to II ordered to stand part of the Bill.

Schedule agreed to.

Bill reported, without Amendment.

Motion made, and Question proposed, "That the Bill be now read the Third time."

9.44 p.m.

Mr. R. Gibson: This Bill has gone through its various stages without Amendment. Clause 2 deals with damages and solatium. Nothing is said in the Bill about amount of damages. One has in mind the fact, which I think ought to be stated here, that the sums that are awarded as damages in Scotland are very low in comparison with the awards for damages in England. I cannot understand why that should be so. Grave dissatisfaction is expressed in Scotland because of that disparity. I cannot understand why the damages paid in England in respect of the death of a child, should be so much larger than those paid in Scotland in respect of the death of a child of corresponding degree. That is a matter of administration, and it is a matter that depends on the carrying into effect of this Bill which is now leaving us. I hope that in the days to come some levelling up of these damages as between the two countries may be achieved and that it will not be necessary to introduce any legislation at all that will limit the powers of a jury or of a judge in assessing damages.

CONFIRMATION OF EXECUTORS (WAR SERVICE) (SCOTLAND) BILL [Lords].

Considered in Committee; Reported, without Amendment; read the Third time, and passed, without Amendment.

COLONIAL DEVELOPMENT AND WELFARE BILL.

Order for Consideration of Lords Amendments read.

Motion made, "That the Lords Amendments be now considered."—[Mr. George Hall.]

9.47 p.m.

The Under-Secretary of State for the Colonies (Mr. George Hall): With your consent, Mr. Deputy-Speaker, and the consent of the House, I would like shortly to explain the Amendments. The principal Amendments are those which were considered in this House on the Committee stage. A promise was given that the principle of the Amendments would be considered, and if suitable words could be found, the Amendments would be embodied in the Bill in another place. Consultations took place between my hon. Friends on both sides of the House, agreement was reached, the Amendments were inserted in the Bill as promised, and, apart from these two Amendments, the only others are drafting Amendments.

Mr. Ammon: Will my hon. Friend kindly give us some indication of the Amendments? I expect that they are to do with trade union conditions, but if he will tell us, it will give us that amount of information.

Mr. Hall: I was of the opinion that my hon. Friend knew, as I believe he does.

Mr. Ammon: I did know.

Mr. Hall: The Amendments deal with the question of trade unions and the right of the Secretary of State in the consideration of grants of money out of money provided by this Bill to encourage the provision of reasonable facilities for the establishment of trade unions. The second Amendment is really the definition of the Fair Wages Clause, and I want to pay my tribute to the hon. Member for the Forest of Dean (Mr. Price) for providing us with some suitable words which are embodied in this Amendment. One Amendment deals with the granting of reasonable facilities for the establishment of trade unions, and the second one is the definition of the Fair Wages Clause.

Question put, and agreed. to.

Lords Amendments considered accordingly.

CLAUSE 1.—(Schemes for colonial development and welfare.)

Lords Amendment: In page 2, line 5, after "section," insert "as respects any colony."

Mr. George Hall: I beg to move, "That this House doth agree with the Lords in the said Amendment."

Mr. Deputy-Speaker (Sir Dennis Herbert): I have to call attention to the fact that this raises—and I think all the following Amendments raise—a question of Privilege, and a Special Entry will be made accordingly in the Journals of the House.

Lords Amendment: In page 2, line 7, after "himself," insert:
in a case where the scheme provides for the payment of the whole or part of the cost of the execution of any works, that the law of the colony provides reasonable facilities for the establishment and activities of trade unions, and ".

Mr. Hall: I beg to move, "That this House doth agree with the Lords in the said Amendment."

Mr. Deputy-Speaker: The same remark applies in this instance.

Subsequent Lords Amendments agreed to.

ELECTRICITY (SUPPLY) ACTS, 1882 TO 1936.

Resolved,
That the Special Order made by the Electricity Commissioners under the Electricity (Supply) Acts, 1882 to 1936, and confirmed by the Minister of Transport under the Electricity (Supply) Act, 1919, amending the South West Midlands Electricity District Order, 1923, a copy of which was presented on 26th June, be approved."—[Mr. Montague]

The remaining Orders were read, and postponed.

REPAIR DEPOT (LAND ACQUISITION).

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Paling.]

9.53 p.m

Mr. Stokes: The matter which I wish to raise to-night and of which I have given notice to the Secretary of State for Air was referred to in the Fifth Report of the Select Committee on National Expenditure. It concerns the acquisition of a site for a repair depot in Scotland which has been a subject of Questions by me on 18th June and 10th July. I do not want to waste the time of the House by going into along recital of what has already been reported to this

House, but I would like to recapitulate the main facts. The land purchased was a piece of 160 acres which on Clydeside, at any rate, was generally accepted as bogland. There were seven vendors for the Government, and it is interesting to note who these were. First, there was the Paisley Borough Council, which sold 11.706 acres at a price of £2,050, which worked out at an average price of £186 per acre. Then there was His Grace the Duke of Abercorn who sold 49.227 acres for £6,150 at an average cost of £123 per acre; Mr. Robert Rowand who sold 21.317 acres for £2,878 at an average of £137 per acre; the Houstor. Brothers who sold 39.804 acres for £5,000, at an average of £125 per acre; the Misses Taylor who sold two lots, one of 9.614 acres for £2,237. at an average Of £220 per acre and the other 16.14 acres for £3,763, average £235 per acre; the Douglas Estate (Earl of Home), which sold 11.857 acres for £1,200, average £100 per acre; and J. P. Cochrane's Trustees who sold 5.149 acres for £750, average £150 per acre. The total acreage was 164.814 and the cost £24,028, with an average of £145 per acre. It is noteworthy that the whole of this land—not a part of it—was de-rated and unused, and therefore presumably considered valueless, prior to the purchase and has contributed nothing whatever to the upkeep of the locality. This is the land which we are fighting for and which apparently the people are being compelled to pay for before they fight for it in order to satisfy the Duke of Abercorn and the Misses Taylor. Can we expect that, when the war is over and the soldiers return from their fighting, they will find that the land really belongs to them or that it has been shuffled off by the Government on to some private interest which wilt ask them to buy it again before the next war?
The total price was £145 per acre. In pursuing the Chancellor of the Exchequer on the subject, I failed to get any promise from him that there would be any Income Tax whatever levied on these people, who apparently sold what was considered worthless land at a high profit to themselves. In his definition of what is considered a revenue and what a capital sale, he is so vague that it is impossible for anyone except someone probably of exceptional intelligence to understand what it means. I am not one of those select few, and I have so far failed to


understand on what basis he decided whether it should be subject to tax or not. It is well to recall to the House, what is in the report of the Select Committee, that, in addition to the expenditure on the land of some £26,000, a large amount was spent by the contractors in driving piles into the bottomless bog before this thing was stopped, and, on top of that, £160,000 was spent on sheds and permanent fixtures which never got permanently fixed, and which presumably have some residual value, but nothing like the value at which they were purchased. Something of the order of £464,000 sailed down the drain or into the pockets of the Duke of Abercorn.
It is well known that some time before the war the Royal Air Force had a small aerodrome station somewhere in this locality which had been there for more than 10 years, so it is not a matter of giving information to the enemy. It is surely reasonable to assume that the Air Force authorities should have known something about the land they were proposing to purchase and use next door. If it was right that that site should have been purchased, why has it been found right that the correct site is not many miles from a place I must not mention for fear of giving information to the enemy? If it is right now, it ought to have been right in the first instance, and ought to have been selected instead of the bogland that was taken over.
Surely the Government authorities must have made some kind of investigation as to what has gone on in the neighbourhood before, and they must have been aware, if they had their wits about them—I doubt whether they had—that less than 30 years ago a racecourse stand in the immediate vicinity collapsed for the same reason, that the ground was unstable and that it was impossible to arrive at a satisfactory foundation. It would occur to the ordinary business man that the most remote inquiry, an inquiry at the bar of the local public house, would have ascertained that the land was unstable, that this collapse had taken place and that it was doubtful whether it would be capable of standing any heavy weight. An added discomfort which I should like to mention is that, at this time when we are being urged to dig for victory, some 40 acres of vegetable gardens had to be destroyed in order that the pile-drivers' activities

and various other activities could be carried out. Those crops are lost and cannot be recovered, and, as far as I know, the ground cannot be put into a cultivable state again for some considerable time.
Obviously, any local contractor, if he had been asked—and as far as my inquiries go, I have failed to elicit that any local contractor was asked—would have told the Air Ministry that the site was not suitable. One pile-driving company actually made this remark to an acquaintance of mine: "You could pile for ever on that site and you would never get to the bottom." I should like to ask whether any pile-driving experts were consulted before this work was undertaken. There is one point in the report of the Select Committee to which I should like to refer. It appears that in February, 1939, a report from one of the engineering assistants in the Designs Section of the Works Directorate of the Ministry was made as to the difficulty of using this site, but in spite of his report, it was decided to go ahead. I hope that the Secretary of State, when he replies, will tell us whether any real consideration was given to this complaint. It would seem that here we have a civil servant trying to do his best to save public funds and somebody on top, less competent than himself, overrules him, and insists on the work going ahead for reasons not yet explained, despite the fact that the engineering assistant had stated that the site was totally unsuitable. The Select Committee, in support of what I have already stated, says on page 4 of its report:
Though with modem engineering knowledge and appliances it would be wrong to say that any site was impossible for the erection of a building "—
as an engineer, I question that statement—
it would be difficult throughout the length and breadth of this country to find any site which was likely to prove more difficult and expensive than the site here selected.
If the Select Committee could discover that, surely there must have been responsible officials in the section concerned in the Air Ministry who were capable of arriving at the same conclusion before squandering public funds in the way in which they have done. Again, in support of what I have said, the Select Committee states on page 7 of its report:
The Air Ministry representatives have been at great pains to emphasise that the


decision to abandon the second depot was the result of a decision of policy, and that it was not in any way influenced by the difficulties that had been experienced on the chosen site.
I am very sorry that any Government officials could have made such a statement to the Select Committee. It only makes them the laughing stock of people outside in the trade who know, and have known all the time, that this site was impracticable. There may have been both reasons for abandoning the site, but to say that it was not also abandoned because it was unsuitable would be an absurdity in view of the remarks of the pile-driving experts, who say that one could drive until the cows came home and still would not get to the bottom.
There are several questions which I should like to put to the Secretary of State. Why was such a high price paid for this low-lying, mist-ridden bogland? Here I would add that I regret having to raise this question to-night in the absence of my hon. Friends from Clyde-side constituencies. Unfortunately, they are not here. I am sure they would have had a great deal to say had they all been present. Perhaps the hon. Member for Bridgeton (Mr. Maxton), who is present, will have something to say later.
It was known that when this site was purchased it would have to take heavy machinery and workshops—it was not just a question of providing an airfield. If any ordinary business set about purchasing land for their industrial development in the same way as the Air Ministry seem to have done, they would "go broke." No one in their senses would buy this sort of land for this purpose without first taking the trouble to discover the nature of the substratum of the soil. At an early stage it was discovered by the Air Ministry that there were seven feet of peat below the surface and they could have said then, whatever their mistakes had been, "For heaven's sake, let us stop and have a look." The biggest insult of all to my Scottish friends was the fact that an English contractor was engaged to carry out the job. If a small Scottish contractor had been asked to undertake the work, he would have told the Air Ministry the nature of the ground, and public money would not have been wasted. Were a consultant engineer and an architect appointed, and, if so, who were they, and what were their qualifica

tions? Were they really competent to advise upon, the work? Again, who was really responsible at the Air Ministry? I know that the Secretary of State will answer with magnanimity that it was he who was responsible, but of course, we know perfecty well that that sort of reply is only a formula. I hope the House will insist on an answer to these questions.
Of all the efforts on which I have embarked in an endeavour to save public money and satisfy public protest, I have invariably found opposition in the Department. One cannot get at the truth or have things properly investigated and dealt with, and it seems to me that the views expressed by Sir Arthur Conan Doyle best describe this difficulty up against which we all are and I propose to read them to the House again:
The sad fact is that Officialdom in England stands solid together, and that when you are forced to attack it you  not expect justice but rather that you are up against an avowed trade union, the members of which are not going to act the blackleg to each other, and which subordinates the public interest to a false idea of loyalty. What confronts you is a determination to admit nothing which inculpates another official, and as to the idea of punishing another official for offences which have caused misery to helpless victims, it never comes within their horizon.
I hope the Secretary of State will not allow this obstruction and that he will tell us what he is going to do, because the public are very much exercised in their minds by this report and are not prepared to accept a statement that he is responsible for everything which has happened, and that everything in the garden is lovely. Are the vendors to be made to repay the money? It seems perfectly outrageous that at a time when people are not allowed to make excess profits in spite of extra work the Duke of Abercorn and the Misses Taylor should sit at their firesides and reap this harvest because we are at war. The Chancellor of the Exchequer says that he is not going to subject them to Excess Profits Tax for reasons that I do not under There seems no way of getting at them, and there ought to be even a special Act of Parliament passed to insist that this money which has been squandered should be repaid. Of course, much more has been squandered than was paid to the vendors, but at least the money which has been paid to file people who have done nothing with their land—and because they have done nothing is one


reason why we are where we are to-day—should be paid back. I hope that there will be a full and proper inquiry and that we are not again to find ourselves the victims of the closest trade union in the world—the Civil Service.

10.11 p.m.

Mr. Ammon: I intervene, not in order to follow the line of my hon. Friend who has raised this matter, but because I think it concerns the authority of the House of Commons. The House appointed a Select Committee to consider questions of national expenditure and to report thereon. Therefore, what my hon. Friend has asked for, namely, an inquiry, has already been carried out, and the verdict has been delivered and passed to the right hon. Gentleman. I was concerned when I heard his statement the other day in which he rather seemed to repudiate the findings of the Committee. I suggest that if that is the case, a serious position has arisen in which we may even have to appeal to your authority, Mr. Speaker, as to how this Committee stands. The committee sits under the chairmanship of the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) and is representative of all sections of the House. An inquiry was carried out with the utmost care, thoroughness and efficiency, and the subcommittee which was responsible for it was presided over by the right hon. and learned Solicitor-General. Therefore, he has had a considerable part in drawing up this report. The report, as we understood, would be sent to the Air Ministry or would be considered by the Ministry after having been delivered to the House, and it was expected that some action would be taken on it. Undoubtedly it has been proved up to the hilt that there was gross inefficiency and almost criminal carelessness in regard to the problem we are now considering. Another part of the report also bears considerable testimony to that. It is well to note that, following on what my hon. Friend read from page 4, the Committee say:
It seems clear to the sub-committee that at least £250,000 has in the result been wasted.
The House ought to take note of that. In summing up they say:
The sub-committee are not satisfied that sufficient care was taken before rejecting other sites in the immediate neighbourhood. It is much to be regretted that the advice of competent local people was neither asked for nor

obtained. While they can well understand the necessity for speedy decision, the sub-committee are bound to report that financial considerations in the selection of the particular site did not receive the close scrutiny to which they should have been subjected.
That is a very grave indictment of the Air Ministry, and it is not to be lightly brushed aside, because the Committee was specially appointed by Parliament to consider cases like this and to deliver reports thereon. Those reports are the considered findings of that Committee, and one would naturally expect that there would have been some statement that somebody had been taken to account for what was done. Had it been an ordinary workman who had committed an indiscretion or a fault of duty, he would have been discharged, but because there are people in fairly high positions who have blundered so terribly and palpably and have cost the State so much money, they are probably still continuing in their positions and are likely to add still further to the cost.
Further, the action or inaction of the right hon. Gentleman causes us to have doubts about what is happening in other directions. The sub-committee found conditions so grave in the Air Ministry that the chairman of it came to this House and asked for special absolution in order that the report should not be delivered to this House, because of what it would reveal, but sent direct to the Ministry itself or the Prime Minister. If a report which has been published to the world is ignored in this way, we have a right to ask what is happening with regard to that other very serious report which was too grave to be submitted to the gaze of this House. The right hon. Gentleman has no right to stand up in the House, as he did last week, and put himself in the position of defending these other people. In the first place, he was not the Minister concerned at the time, and in the second place the court appointed by this House had delivered its verdict and had a right to expect that the Minister responsible for the Department would see that action was taken on that verdict. Therefore, I am not concerned about the points of detail raised by my hon. Friend, because they are dealt with in the report itself. The verdict was delivered to the right hon. Gentleman in order that he should act upon it, and it is not fair to the House—it is an insult to the House, in fact it challenges the


authority of the House—for him to act in the manner he did, indicating, as he seemed to do, that he is not prepared to take any notice of the report.

10.17 p.m.

Mr. Maxton: I intervene to take away the reproach against the Clydeside area Members made by my hon. Friend the Member for Ipswich (Mr. Stokes). We have not been uninterested in this matter. When the hon. Member was apportioning blame, I intervened to say that it was the Chancellor of the Exchequer who was responsible, but if my recollections are correct, this business started in the time of the previous Minister.

The Under-Secretary of State for Air (Captain Harold Balfour): No, the scheme was initiated at the time when my right hon. Friend the Chancellor of the Exchequer was Secretary of State for Air.

Mr. Maxton: In any case, the Under-Secretary was there all the time, and has a first-hand knowledge of the matter, and whoever else may avoid responsibility he cannot. I am the more hurt that he should be in a position of this sort, because for many years he was my next-door neighbour on this bench, and I thought I had managed to groom him up to he a sort of half-competent Minister, just as I hoped that by reason of the fact that the present Secretary of State sat so near to myself for many years some virtue would perhaps pass to him. There can be no excuse that a hurried decision was necessary in this matter owing to the stress of the war, because the decision to go ahead on this particular site was made when things were relatively calm. The Under-Secretary knows that it was a very deliberate decision of the Ministry to go to this site in preference to extending the civil aerodrome in the near vicinity; they came to the decision to go to this site because of certain engineering difficulties. Is the Under-Secretary denying that? If the hon. and gallant Gentleman is saying that the case must be left in the Minister's hands, I must ask him whether he contradicts my statement now, by the shaking of his head.
The decision to go to that site and to extend it, rather than develop the site of the civil aerodrome in the near vicinity

—and this statement is badly hampered by the consideration that you must not mention names of places—was taken because the engineering difficulties on the civil site were very great. There was a certain hill to be removed and, unfortunately, there was a sentimental consideration, because there was a cemetery on the side of the hill. But the money which has been spent on the boggy site could have shifted the hill 10 times over, and disinterred and re-interred all the dead people, and given them all a great burial; it would cost a fraction of the £250,000 that was bunged down into the bog. I cannot understand why this decision was ever made. I was aware that, for a period of years, going back, to my knowledge, a dozen years, there was a full inspection of that area by the Air Ministry, both from the point of view of civil aviation and R.A.F. considerations. They went over the whole of the west of Scotland, because the city of Glasgow was dissatisfied that their civil aerodrome should be somewhere about eight miles from the centre of Glasgow. The district was surveyed in every possible way, and one site after another was rejected, long before the war was even contemplated; yet they went on, and, coming to a decision for the future R.A.F. development in that area, they chose a completely impossible site. There is something fundamentally wrong in the organisation of the Ministry, if something like that can happen in time of peace, when there is plenty of time and no rush, and a big area of territory to be examined.
I am not now interested in the matter. I took it up at the time of the civil aviation problem, and I questioned the right hon. Gentleman's predecessor. I got an answer which, in the light of the Committee's report, was evasive. He told the House that they would go to another area which was more suitable for the purpose. No indication was given that this area was definitely bad and that a huge sum of money had been wasted. There was merely the suggestion that another area had been decided upon because it was more convenient. After that, just by accident, I heard that a committee of inquiry were going there, and I endeavoured to guide them as to the best way of pursuing that investigation. I myself went over the site—tramped over it, and got myself into a devil of a mess in doing it.
I want to ask the Minister a question on a very small point of detail. There is a serious shortage of timber, I understand. Has any attempt been made to recover those piles which were sunk in that place? I saw piles which had been sunk, and they were as fine timber as I ever saw, huge big things. I do not know how many of them went down into the bog, or whether any attempt has been made to bring them up. There is a further point for the Minister, and this is my only interest left in the matter, since the Committee's report has been made.
I was very concerned about the 40 acres that had been taken off the approved school in the vicinity, which had a great record in the district. It was a model school, the boys of which, under the enthusiastic direction of their superintendent and governors, had reclaimed those 40 acres and made a fertile little farm out of them. It was the principal manual training which the boys got in the school, and they were producing wonderful crops, not only producing all the fresh vegetables for the school itself, but a surplus which was sold in the community round about. All this work was wiped out in three months. I want to know whether that school has got back its 40 acres, and some financial compensation that would help to restore it to its old position of fertiity before the hand of the vandal was laid upon it.
I have no particular worries about the Duke of Abercorn—in fact, when I was inn inquiring about the owner I was told it was the Duke of Abercorn's trustees. I rather fancy that the estate must he in the hands of a receiver or something of the sort. Neither have I any knowledge of the Misses Taylor who have been mentioned. I do not know them at all, but I am interested in the school and its 40 acres. That is a very small fraction of the problem which is involved, and it is one in which, as a former Secretary of State for Scotland, the right hon. Gentleman might have a special interest and to which he might give special attention.

10.28 p.m.

Sir Adam Maitland: The chairman who presided over this responsible Select Committee is now sitting on the Front Bench, and is obviously a free agent at the moment. As one who assisted him in his investigations and in the compilation of the report, I want to say at

once that I stand by every word of it. I would like to reinforce what has been said by the hon. Member for North Camberwell (Mr. Ammon). This is the fifth report of this Select Committee, and I think there have been three other reports issued since. We all realise, of course, that every Department to-day is particularly pressed, but I think it is important that the House of Commons, having appointed a committee to investigate important matters of this kind, should see that the traditions and customs of the House are complied with; and I would like to ask whether, in these cases where a Select Committee is set up and presents a report to the appropriate Ministry, in due course there should not come back to the committee itself a considered reply. I understand that that is in accordance with the traditions of the House and I think that is a tradition which should be maintained in this case, not only in regard to this particular inquiry but with regard to the work of the Committee as a whole, because we recognise—and it is only fair that we should recognise—that in the investigations which have been made, we are to some extent guided not so much by the facts but by general tendencies. We are not a court of law. We take such evidence as we can—usually that evidence which appears to be well founded.
The hon. Gentleman who has seized, as he always does, this opportunity of riding his particular hobby horse, has raised a case which I hope will not rest. It is only fair to say that this land may not be used for purposes for which heavy machinery is required, but it may be used for other purposes. It is only right that the House should be told this. The House will find no adverse comment in this report with regard to the price of the land itself. In point of fact, the site is situated near a large town, and, on inquiry, we were assured that a price higher than that which was paid would probably have been the right price. I only mention this; it is a most unimportant point by comparison with the greater question.

Mr. Stokes: The hon. Member does, I hope, realise that this land was all de-rated. That being the case, on what basis was this valuation arrived at?

Sir A. Maitland: To me, the fact that this land was derated does not mean that it was necessarily without value. The


hon. Member has said that all derated land is of little or no value, but he knows well that where land is near an industrial district it is of greater value. This was potential building land, and the hon. Member will agree that land near industrial centres and similar to land in the vicinity which has been sold at a higher price than that mentioned in the report, cannot arbitrarily be said to have been bought at too high a price.

Mr. Stokes: Does the hon. Member consider that the Duke of Abercorn and the Misses Taylor gave that value to the land as an aerodrome site? That is the point.

Sir A. Maitland: If I argued that point, I should be doing what the hon. Members wants me to do, by giving him an opportunity to expound his pet theory. I come back to the important point—that £250,000 was wasted. That is the fundamental thing in connection with this report. There were at least two sites originally inspected: one in the west of Scotland and the other in the east. think the hon. Member for Bridgeton (Mr. Maxton) rather confused them, if he will forgive my saying so. The Air Ministry and the Treasury, on grounds largely connected with availability of labour, chose this site, in the west, called Site B in our report. It is well to remember that the particular scheme involved was of something in the nature of £1,500,000, and here I must say that the contractors themselves assured us that the difficulties in regard to the site, great as they were, were not insurmountable. We had to accept that evidence. That was also the evidence tendered by the Ministry. But the site was abandoned, we have been informed, on quite other grounds, on the ground of policy, which meant the abandonment of the idea of proceeding with the erection of civil repair depots.
It may very well be—and it is suggested in our report—that if the scheme which was originally proposed had been carried out in its entirety, there would not have been this criticism with regard to the fact that £250,000 was wasted, because had the scheme gone through, it would have been found that the cost had no doubt increased by some hundreds of thousands of pounds. I hope that in this matter we shall not look for political heads. What impressed me on one occasion in particular was what was said

by one of the witnesses. He certainly left me with the idea that the Angel Gabriel could never have persuaded him to give up this particular site because it was a difficult site.
This is not the occasion on which to mention names, but certainly that impression remained with me very much indeed. We had to consider main issues and principles affected by the reports submitted. I hope, therefore, we shall not be driven on to a side issue but will stick to the main purpose of the report, which is to point out that there was not sufficient care exercised in regard to the whole question. It is not a question of ascertaining responsibility. Our responsibility is at an end when we have submitted this report to our colleagues in this House, but I ask, when that duty is discharged, that there shall be considered replies from the Ministries.

10.28 p.m.

Mr. Glenvil Hall: I would like to reinforce what the hon. Member for Faversham (Sir A. Maitland) has said. I feel that the fact that certain individuals sold land for this aerodrome site is, as far as this discussion is concerned, rather beside the point. Until the taxation of land values is brought into operation you will always get all over the country, as you are getting now, people selling their land—and I am not blaming them—for such prices as they can get even if it is needed for the national emergency. We need not go into details on that ground to-night.
I would like to ask the Secretary of State for Air one or two questions. The
hon. Member for Bridgeton (Mr. Maxton) raised the point that I intended to raise as to what was happening to the enormous number of piles already driven into this site. I understand that at least 25 firms started to drive piles one after the other into this land and each in turn gave it up. Was the Minister aware of the fact that this large number of firms was engaged on this work and did not the fact that one after another gave it up as a bad job mean something to the officials at the Ministry? Did they not think that possibly this work was more than could be undertaken? I make that point because, in my view, the same thing may be happening elsewhere. According to the reply which the Minister gave to a Question asked in this House the other


day, I understood him to say that the valuation placed on the site by the Inland Revenue was larger than the maximum price paid for the land. Does not that show that the price frequently fixed by officials of the Inland Revenue is far above the actual price which should be paid? I would like him, if he will, to give some idea of how these Inland Revenue officials arrived at the valuation which they put upon this land. As my hon. Friend has pointed out, it is nearly always de-rated and the value which, at best, must be surmised, is frequently above that placed on the land by local people.
I would ask the Secretary of State for Air whether he has any machinery at his Ministry which would enable the National Exchequer to guard itself against the forced-to-pay prices which are put on land by the Inland Revenue authority and what check he has to show that the Inland Revenue valuation approximates to the value put on land by people living in the vicinity of the land so valued?

10.41 p.m.

Sir Joseph Nall: I want to remove one misapprehension. De-rating has nothing whatever to do with the value of the land. It was presumably de-rated because it was agricultural land but that does not mean to say that it was not assessed at some value. In any case it would be assessed for Schedule A Income Tax and only de-rated because it was used for agricultural purposes.

10.42 p.m.

The Secretary of State for Air (Sir Archibald Sinclair): When the hon. Member for Ipswich (Mr. Stokes) said he would raise this question I felt very grateful to him because this subject has been studied by a Select Committee of this House and has attracted a considerable amount of public attention. But I did not feel so grateful to him then as I do now, especially after the speech of my hon. Friend the Member for North Camberwell (Mr. Ammon) who seemed to suggest that, from the answers I gave him to Questions, the report of the Select Committee was to be completely ignored, and thrown into the waste-paper basket and that I proposed to take no notice of it at all. Such was very far from being my intention. My answers to Questions asked me last week were directed solely to the issues arising out of the main

question raised by the hon. Member for Ipswich about the price of this land.
That is one of the few aspects about this transaction which escaped censure, criticism or admonition by the Select Committee. It was only of that aspect I was then speaking but may I make it clear to the House that I have come fresh into this controversy and my point of departure was the report of the Select Committee. Far from repudiating the findings of that Committee I made them my starting point. The hon. Member for Ipswich said it was very difficult to get at the truth. Well, I thought that, at any rate, was a good place to look for it as it was carefully considered by a Select Committee of Members of all parties in this House. I thought I had better start from their findings. The hon. Member for Faversham (Sir A. Maitland) pointed out in a very fair speech, that it is not only the Air Ministry which comes under the criticism of the Select Committee and it would not be at all fair to state this case in terms which suggest that it was the Air Ministry, of their own free will, who chose this site, and was solely responsible for the decision that was taken—[HON. MEMBERS: "Who was?"] I will tell the House in greater detail.
Let me remind the Rouse of the history of this question. It was decided in September, 1938, that three civilian repair depots were to be established for the repair of aircraft during the war. The assumption then was that the resources of the aircraft industry would be fully employed in other directions and it was necessary to have this special organisation for the repair of aircraft. Between November, 1938, and March, 1939, there was a good deal of pressure brought to bear on the Air Ministry to place, at any rate, one of these depots in Scotland and one near Glasgow. There were some 27 Parliamentary Questions, I am told, asked during that time, and four deputation of Members were received urging the claims of Scotland in general and of Glasgow in particular.

Mr. Maxton: Will the right hon. Gentleman tell us what was the political composition of those deputations?

Sir A. Sinclair: I do not wish to he drawn into details, but it is fair to say that among those who made up the deputations and those who asked the


Questions there were Members of all parties.

Mr. Maxton: We were never associated with anything of the kind.

Sir A. Sinclair: Perhaps I ought to exclude the hon. Member and his party, but there were many Members of other parties. The requirements of these depots were very exacting. They are mentioned in the Committee's report. They had to be near an existing aerodrome, they had to have railway communication, and for strategic reasons they had to be west of a given line—that very much limited the area of choice—and there had to be available labour near the site. While the Air Ministry was making up its mind where this thing should be, the Assistant Commissioner for Special Areas in Scotland wrote:
I am to say that the Commissioner hopes that these considerations 
which were mentioned in the letter—
will enable the Air Ministry to decide in favour of getting the proposed depot in area B.
In the meantime the Air Ministry had decided in favour of area A, but the Treasury Inter-Services Committee disapproved of area A and approved area B. The Ministry of Labour wrote a very strong letter. This is to an officer in the Air Ministry perhaps more responsible than any other:
You will remember that in your letter you said you had found area A very favourable from the point of view of speed and cheapness "—
so economy was in the minds of the responsible officers of the Air Ministry—
and that you have decided that you must proceed with the depot there. We have looked at the area again and feel obliged to enter a serious objection to the decision from the point of view of the potential labour supply.
He goes on to say further:
I hope that in the light of the foregoing observations, you will reconsider your decision to go ahead with area A, and decide instead to adopt the area B proposal. As I have said, my Department is very disturbed about the area A proposal, and my Minister may well take the line that it should be referred to the Committee of Imperial Defence before a decision is taken.

Mr. Stokes: May I ask the right hon. Gentleman whether the site now used in place of the collapsed site is in area B or area A?

Sir A. Sinclair: The site now used is the one which the Air Ministry did not want. It is in area B. The decision taken by the Air Ministry was for area A, and it was only because of pressure from the Ministry of Labour and other Departments—

Sir Irving Albery: The right hon. Gentleman has just said that it was suggested that the matter should be referred to the Committee of Imperial Defence. Can he tell us whether it was so referred, and if not, why not?

Sir A. Sinclair: No, because the whole weight of the pressure was against the Air Ministry, and the Air Ministry knew it could not get its way on that Committee. The decision of the Air Ministry was for area A, and it was that decision which was being contested. The Air Ministry were reluctantly compelled to abandon the project in area A and to go to area B.

Mr. Hammersley: Are we to understand that in matters of this character the Air Ministry are swayed by representations made by the Ministry of Labour?

Sir A. Sinclair: The decision was a Ministerial decision, and Ministers decided, in view of the representations which were made from various quarters—after all, unemployment was very important—against the advice of the official advisers of the Air Ministry, to go to area B. The Secretary of State's panel of industrial advisers, an independent panel of outside experts, declared that the scheme was sound, and approved of the lay-out. It may be asked whether, even if the Ministry were compelled to go to area B, there was no better site at the side or in the neighbourhood of area B? It so happened that a very intensive search had been conducted by the Civil Aviation Department of the Air Ministry for a good airport for Glasgow. There is only one other site within the immediate neighbourhood of area B which is possible, and I think it is the site which the hon. Member for Bridgeton (Mr. Maxton) had in mind in making his speech. All I can say is that it is a very bad site. It is a site which had to be rejected for civil aviation, and it was not found possible to establish the Glasgow municipal airport there, partly for the reason that there are a great many pylons in the vicinity,


and partly because, I am told, it is particularly bad for fog. Of course, if it was found not good enough for civil aviation, hon. Members will realise that a fortiori it was not good enough for military aviation, because the machines which are to use the aerodromes are much faster, the bombers are much heavier, and the difficulties of getting away from a limited space are much greater in the case of heavy bombers. Therefore, it was not suitable for military use. Those, briefly, are the reasons for which the site in area B was adopted.
Now, why was it abandoned? Not because it was found impracticable, not because, as the hon. Member for Ipswich said, no new site could be found. Those were not the reasons. It was, as the hon. Member for Faversham (Sir A. Maitland) says, because a new decision of policy had been taken. Let me make it clear what that decision was. It was a very big one, namely, that whereas, as I informed the House a short while ago, the original idea was that the repair of aircraft during the war would be done by this special civil repair organisation, because there were no resources available in industry, it was subsequently discovered that these resources would in fact exist. Lord Nuffield became adviser to the Air Ministry on this subject, and under his advice it was decided to make this change of policy, and the civil repair organisation was set up under Lord Nuffield. It was for that reason that it was unnecessary to go on with this project. True it was, and I am not attempting to hide it from the House, that the site was much worse than the Air Ministry had all along suspected. But the additional expenditure o£100,000, heavy though it was, and grievous though it was, would have been much less than the expenditure involved in obtaining a similar site, far away from a city or town, far away from available resources of labour and where a great housing scheme would have had to be undertaken. Indeed the Select Committee accepted the statement.
I started my speech by saying that I accepted the findings of the Select Committee, and I make no exception in favour of this particular one. The hon. Member for Ipswich did not put a question which I was told he would raise, as to the name of the expert who was consulted about pile-driving. He was Professor

Terfaghi. He said, that surely we knew perfectly well that any reasonable man must have known perfectly well that it was impossible to make a good site for a depot of this kind on this soil. I am very new to these matters and I have not a very great knowledge of pile driving experts, and I have no doubt that the name of our adviser will mean more to the hon. Member than it does to me. I know that he is an expert on this subject of worldwide reputation. He had tackled similar undertakings in other parts of the world.

Mr. Stokes: Who were the consultants for the construction of the whole scheme not the advisers—when the Ministry got into trouble?

Sir A. Sinclair: The consultant engineers were, of course, the Ministry's works department. The decision to abandon was taken on the grounds of broad policy. It followed from this general question that the depot in area B was no longer required.

It being Eleven of the Clock, the Motion for the Adjournment of the House lapsed, with the Question put.

Question again proposed, "That this House do now adjourn."—[Mr. Munro.]

Sir A. Sinclair: As the hon. Member for Bridgeton said, these decisions were taken in the hurry and stress of war when there was great need for speed. The Government were convinced that we were approaching a crisis in international relations, and it is true to say that allowances have to be made for that. The hon. Member for Bridgeton asked whether it was possible to recover the piles. I regret that that was impossible. They were driven into the clay and they were covered with concrete foundations for the sheds. He asked whether any compensation was paid to the special school which had market gardens on that site. A sum of £1,387 was paid to the school.
Let me turn to the main subject of the speech of the hon. Member for Ipswich, that of the price paid for the land. He asked why such a high price was paid for this low-lying, mist-ridden land. It is not good land, I admit, but he overdrew the picture a little. Part of the site has, for example, been chosen by Paisley Town Council for a housing site. It has great merits as a building site. On one side it is bounded by St. James Park, which belongs to


Paisley Town Council. On another side is the L.M.S. line, and on a third it is bounded by a main road which has recently been widened to 80 feet. At the time of the purchase of these 164 acres, one-third was used for allotments and market gardens, one-third was arable land, and one-third was pasture. The best advice that the Ministry was able to obtain was that it was worth £250 an acre. Part of it is feued to-day at a price which is equivalent to a capital value of £500. A site which is on the opposite side of the aerodrome, and is just as low as this land, is feued at a price which gives an even higher capital value. Much of this ground was already in the market as attractive building sites and some of it had been bought by Paisley Town Council for its housing scheme. They bought it for £125 an acre. Another part of the site had been offered—although they had not closed with the offer then —at £500 per acre. I mentioned just now that among the representations which the Air Ministry had received in favour of this area was one from the Commissioner for the Special Areas. He, in pressing this project upon the attention of the Air Ministry, warned the Minister that the price which would be asked—he was not valuing it—for two parts of it would be £250 an acre; for a third part of it £500 an acre and for a fourth part £800. The Air Ministry bought it at an average price of £145 an acre. In view of these facts I am sure the House will not be surprised that the Select Committee did not make the purchase price the subject of condemnation.
In conclusion, let me remind the House of exactly what the criticisms of the Select Committee were. They said first that the financial considerations in the selection of the site did not receive the close scrutiny to which they should have been subjected. On the one hand I must answer on behalf of the Ministry that they did receive their scrutiny, so much so that the weight which they did attach to the factor of cheapness was one of the subjects of criticism in the letter from the Ministry of Labour which I have read. On my own behalf I say that I accept that admonition, and I will endeavour to be a faithful and economical steward of the public moneys entrusted to me. I have given certain instructions in the Ministry, to which I shall refer later.
The second criticism is that insufficient care was taken before rejecting other sites in the immediate neighbourhood. I can only say that a search extending over three years has revealed no other site and no one has yet suggested an alternative. The third criticism was that the advice of competent local people was neither asked for nor obtained. I have always felt strongly that Government Departments ought to get local advice when they are making purchases or undertaking activities in different parts of the country. In this case the Air Ministry was itself in the position of a local person. It had been in that area for a great many years. In that particular area, and just adjoining this site, there had been an aerodrome, there had been an Auxiliary Air Force squadron and a Royal Air Force Volunteer Reserve unit. The Air Ministry knew the area very well indeed, and, from their own knowledge, did not want to go there, as I reminded the House earlier.
I certainly bow to this criticism, and to meet it and the other criticisms to which I have referred I have given the following instructions: First, that detailed estimates are invariably to be prepared before the purchase of any site is approved, and these will be carefully examined by the Finance Division concerned. Secondly, I found that even before the sub-committee's inquiry had begun requests for additional supervising staff had been made and two additional supervising land officers have now been posted to the lands branch. In future, all estimates will be submitted in detail to one of those officers before submission to the Finance Division. Lastly, about seeking local advice, a subject on which I have strong views, instructions have been given that if a specially expensive or difficult site is to be acquired a second opinion must be obtained from a suitable and qualified land agent and valuer in the neighbourhood.
Let me again thank the hon. Member for giving me the opportunity of making this statement. I hope that my statement has, at any rate, convinced the House that we not only respectfully accept the report of the Select Committee but that we are seeking to profit by it and have taken action to give effect to its findings.

Sir A. Maitland: Will the right hon. Gentleman answer the question which was put to him, as to when the Committee can expect a reply to the confidential report which was sent?

Sir A. Sinclair: I think that confidential report was sent to the Prime Minister.

Sir A. Maitland: Is not the right hon. Gentleman able to say whether any action has been taken with regard to it?

Sir A. Sinclair: I should want notice of that question, but I am not sure whether it is a question which should be addressed to me.

Mr. Stokes: Why was an English contractor—a very good one—employed on this job and not a Scots contractor?

Sir A. Sinclair: I am told that this contractor was considered to be the best for the job, but the employment of Scots contractors has been the rule in the past and will be so in the future.

Sir Joseph Lamb: Can the Minister give us a definite assurance on one point? I was very concerned about one part of his speech, and disconcerted, because he said that the Ministry did not want this land, but took it by compulsion

brought upon them by other Departments. It is true that those Departments may have wanted that to be done for other reasons, such as the Ministry of Labour, which may have had a great deal of unemployment there, and may have wanted that land used. Although that was desirable, it did not justify that land being taken and this money wasted. I ask that, if pressure is brought to bear upon them, the Ministry shall consider the merits of the case.

Sir A. Sinclair: The Minister at the head of a Department may want to adopt a particular course but the requirements of that Department must be considered in relation to the requirements of other Departments. I cannot give the hon. Gentleman an undertaking that, on all matters affecting my Ministry, I shall always be able to get my own way. The hon. Gentleman said that there was pressure to buy this land. I should not have used words to give him that impression. The pressure was to go to a particular neighbourhood.

Adjourned accordingly at Fourteen Minutes after Eleven o' Clock.

Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Oral Answers to Questions — COAL INDUSTRY.

ACCIDENT, VALLEYFIELD COLLIERY.

Mr. Gallacher: asked the Secretary for Mines whether he has yet received a report from the inquiry into the disaster at the Valleyfield Colliery?

The Secretary for Mines (Mr. David Grenfell): I have read the Commissioner's report, which was received yesterday, but I would prefer not to comment upon it until I have had an opportunity of studying it in greater detail.

Mr. Gallacher: After the Minister has had an opportunity of considering the report, will he place a copy in the Library, or will any other method of publication he adopted?

Mr. Grenfell: The report will be published under Section 83 of the Act.

UNDERGROUND WORKINGS (INTER- COMMUNICATION).

Mr. Kennedy: asked the Secretary for Mines whether he has considered the representations of the Fife, Clackmannan

and Kinross Miners' Union regarding the establishment of means of communication between the underground workings of Glencraig and Mary Collieries, Lochore; and whether he proposes to deal with coal mines in other parts of the country on the lines of the union's representations?

Mr. McLean Watson: asked the Secretary for Mines what representations have been made to his Department regarding inter-communication between certain mines belonging to different colliery companies in the County of Fife; and whether steps are being taken to ensure that everything possible will be done to have adequate means of escape where shafts may be destroyed by air raids?

Mr. Grenfell: This matter has been considered in consultation with the representatives of the union and of the employers, but as at present advised I am not satisfied that the proposal to establish a connection between these collieries provides the best immediate means of achieving the desired object. An emergency portable winding plant has, however, been provided in the district and is available for use at Glencraig Colliery, where its use was demonstrated some weeks ago in the presence of representatives of the employers and workmen and of my Department. Appropriate precautions are being taken in all coalfields, including, where necessary and practicable, the inter-communication of neighbouring collieries and the provision of auxiliary winding gear. I shall continue to give close attention to any proposals of this kind which are submitted


to my Department, and I would assure the hon. Members that everything possible will be done to ensure that men are brought to the surface as quickly as possible in case of surface damage by enemy action or other causes.

Mr. Kennedy: I take it that the union and the mineowners are working in unison?

Mr. Grenfell: They were present at the demonstration in July to which I referred, and we shall keep in close touch with representatives of both sides on this question.

Mr. Watson: Does my hon. Friend realise that where two shafts are close together both shafts may be destroyed in an air raid; and what kind of apparatus will be adopted if both shafts are closed?

Mr. Grenfell: It is very unlikely that both shafts will be caught by one explosion, but it has been borne in mind that both shafts may be damaged, and, in those cases where inter-communication with neighbouring shafts can be established, it will be an advantage, but in this particular case it is not an immediate solution of even that problem.

Mr. Gallacher: Will special consideration be given to the safety of the mines in an area that is receiving particular attention from bombs?

Mr. Grenfell: Yes, Sir. That is being done. Perhaps the area most subject and liable to damage of this kind is the Kent coalfield, and we have taken special precautions there by the provision of a sufficient number of auxiliary winding gears.

COAL SITUATION.

Mr. David Adams: asked the Secretary for Mines whether, before the House rises for the Recess, he will make a statement upon the coal situation generally, and, in particular, on that affecting the exporting areas of the coalfields?

Mr. Grenfell: I desire to make a statement on the lines suggested, and I hope that a suitable opportunity of doing so will occur before the House rises for the Recess.

SPENT SHALE.

Mr. A. Edwards: asked the Secretary for Petroleum when he can give the analysis of Scottish shale residue after treating to remove oil?

The Secretary for Petroleum (Mr. Geoffrey Lloyd): I am circulating in the OFFICIAL REPORT a statement showing the result of the analysis of a typical spent shale as discharged from the retorts.

Mr. Edwards: As this material contains a substantial percentage of aluminium, will the hon. Gentleman call the attention of the Minister of Aircraft Production to a very valuable aluminium lying dormant?

Mr. Lloyd: Certainly, Sir.

Following is the information:

Per cent.


Carbon
3


Silica
48·5


Alumina
25·2


Iron Oxide
12.1


Lime
5·3


Magnesia
2·2


Sulphuric anhydride
3·2


Chlorides
Trace


Alkalis
Trace

CHILDREN'S OVERSEAS RECEPTION SCHEME.

Mr. Woodburn: asked the Under-Secretary of State for Dominion Affairs whether, in pursuance of their policy of maintaining a balance of all sections of the population in the evacuation of children to the Colonies and to America, the Government are prepared to make this possible by assisting financially, by grants of free passages, to children of parents who are prepared themselves to assume all the risks of sending their children abroad?

The Under-Secretary of State for Dominion Affairs (Mr. Shakespeare): I would refer the hon. Member to the reply given by the Lord Privy Seal on 16th July. His Majesty's Government have deliberately come to the conclusion that they ought not in existing circumstances to take the responsibility of sending children overseas unless they go in escorted ships, and, in their view, to encourage by the offer of financial assistance the sending of children abroad, otherwise than in


escorted ships, would be inconsistent with this policy.

Mr. Woodburn: Is the Minister aware that that policy simply means that those people who can afford to send their children do so, that it is an effective bar to the people who cannot afford to send their children, and that that is contrary to the Government's policy, as announced, to maintain an equal balance between the two sections of the population?

Mr. Shakespeare: If it meant that, then the policy would indeed be wrong, and I think that the hon. Gentleman will see that that is not so.

Mr. Woodburn: Will the Minister inform me how exactly the balance is to be maintained, if people who can make arrangements for the reception of their children abroad cannot afford to pay their passage, and if people who can afford to pay their passage are sending their children out?

Mr. Shakespeare: I understand that a statement is to be made as to means.

Mr. Mander: Is it true that the children who have arrived during the past few days have not gone out under the Government scheme at all?

Mr. Shakespeare: There is a party of C.O.R.B. children who have already arrived in Canada, but the bulk of them have gone outside the Government scheme.

INTERNEES (DOMINIONS).

Mr. Sorensen: asked the Secretary of State for Dominion Affairs whether he will convey to Dominion Governments responsible for internees sent from this country the list announced by the Home Office of categories of internees who may be released; and whether he will approach those Governments to try and ensure that at least the same provisions for release shall apply in the Dominions as in this country?

The Under-Secretary of State for the Home Department (Mr. Peake): I have been asked to reply. His Majesty's Government in the United Kingdom retains the responsibility for authorising the release of civilian internees sent overseas to a Dominion. My right hon. Friend proposes to review their cases as soon as

possible. Arrangements will be made to bring back to this country any person whose release is authorised unless the Dominion Government concerned is prepared to allow him to be at large in the Dominion and he himself desires to stay there.

Mr. Sorensen: While thanking the hon. Gentleman for his reply may I ask whether there will be any official representative of the Home Office in the Dominions, and particularly in relation to these camps or internment centres?

Mr. Peake: I am afraid I cannot say that at this stage.

Mr. G. Strauss: Will the hon. Gentleman be good enough to answer the last part of my hon. Friend's Question as to whether the same conditions will apply for release in the Dominions as in this country?

Mr. Peake: Yes, Sir, I thought that that was covered by the answer. Exactly the same conditions will apply in the Dominions as are applicable here.

Mr. Sorensen: Will the hon. Gentleman consider sending a representative to the Dominions?

Sir Joseph Lamb: Has my hon. Friend been assured that British nationals interned in other countries are receiving the same attention as the nationals from other countries who are interned in this country?

Oral Answers to Questions — TRADE AND COMMERCE.

SPAIN (OIL IMPORTS).

Mr. Gallacher: asked the President of the Board of Trade whether the Anglo-Spanish-Portuguese Agreement which permits the export of particular goods through Portugal to Spain includes oil?

The President of the Board of Trade (Sir Andrew Duncan): No, Sir; mineral oils are not included in the Agreement.

Mr. Gallacher: Is the Minister aware that the Press a week ago on Friday, in reporting the speech of the British Ambassador in Madrid, drew attention to the fact that oil, as well as other commodities, was included in this Agreement?

Sir A. Duncan: No, Sir, I did not see the speech. It probably meant vegetable oil.

LIMITATION OF SUPPLIES ORDER.

Mr. Cocks: asked the President of the Board of Trade whether he has considered the fact that, under the Limitation of Supplies Order, the wholesaler can cancel all or part of his obligations, whereas the manufacturer is not allowed to cancel any of his commitments; and whether, seeing that this anomaly is unnecessarily penalising the manufacturer and causing unemployment, he will take steps to see that the wholesaler is required to honour his contracts to the extent of two-thirds, corresponding to the limit on sales?

Sir A. Duncan: Yes, Sir; this matter was carefully considered before the Order was made. Wholesalers' commitments and stocks prior to the making of the Order were such that, if the hon. Member's suggestion were adopted, raw materials, labour and machinery would be expended unnecessarily on the production of goods for the home market in excess of the permitted quantities. I should add that the Government expect both manufacturers and wholesalers to do their utmost to divert supplies to export purposes.

Mr. Cocks: Is the Minister aware that as a result of this policy, the manufacturer is forced to accumulate stocks in excess of his requirements, and that that is likely to lead to increasing unemployment?

Sir A. Duncan: No, Sir. I am not aware of increasing stocks being held by manufacturers.

Major Sir George Davies: Is my right hon. Friend aware that in the gloving industry there is great difficulty in regard to manufacturers, who are finding themselves loaded with a large amount of stock, on which they get no turnover because of the limitation placed on them with regard to the distribution and manufacture of these gloves?

Sir A. Duncan: It is necessary to keep in mind that one of the objects of this Order is to not place upon the market, for sale at home, goods in excess of what is a reasonable allocation for essential needs, and the keeping back of any stocks for future purposes will, I think, make it unnecessary to employ fresh material and labour in manufacturing additional quantities.

Sir G. Davies: Does not that interfere with the export trade?

Sir A. Duncan: On the contrary. In so far as there is an opening in the export market for these goods now, they can be diverted to the export market.

Mr. Levy: Since the restriction is on the ad valorem basis, and in view of the fact that the tax is to be on goods over which they have no control, how will that affect the restriction and limitation of manufacture, plus price, plus Purchase Tax?

Sir A. Duncan: I shall have to have notice of that Question.

BRITISH OVERSEAS COTTONS, LIMITED.

Mr. Hamilton Kerr: asked the President of the Board of Trade whether direct assistance will be given to British Overseas Cottons, Limited, or whether this body will be expected to act independently without State help?

Sir A. Duncan: Under the Encouragement of Export (Cotton) Order, 1940, a levy of 5d. per 100 lb. of raw cotton is payable to the Board of Trade. The proceeds of this levy are to be available for financing the operations of British Overseas Cottons, Limited.

Mr. Kerr: Seeing that exports are all-important in war-time, is my right hon. Friend assured that this company is receiving adequate financial support to operate effectively?

Sir A. Duncan: Yes, Sir, I feel fairly sure that the whole policy of this company is directed to ensuring that it will be able to make a real contribution to the export effort.

Mr. Hammersley: In the event of this financial assistance not proving sufficient to help the export trade, will my right hon. Friend consider further assistance?

WHITE METAL (EXPORT TO SWEDEN).

Sir Henry Morris-Jones: asked the President of the Board of Trade what quantity of white metal was exported from this country to Sweden in the week ending 27th July; and the quantity during the same period last year?

Sir A. Duncan: As has already been stated in reply to previous Questions, publication of particulars of our trade in individual commodities or with individual countries has been suspended since the outbreak of war.

Sir H. Morris-Jones: Would my right hon. Friend deny the statement that 500 tons of white metal was exported from this country?

Mr. Speaker: The Minister has said that the information cannot be given.

LOSS OF "ARANDORA STAR."

Mr. Kirkwood: asked the Minister of Shipping whether, in view of the serious charges made in connection with the sinking of the "Arandora Star," he will set up a judicial inquiry under the Merchant Shipping Acts, in accordance with the precedent in the case of the loss of the steamship "Lusitania," by submarine action in 1915?

The Minister of Shipping (Mr. Cross): No, Sir. I do not consider that this occurrence calls for a judicial investigation under the Merchant Shipping Acts.

Mr. Kirkwood: Is the right hon. Gentleman aware that on board this ship there were prisoners of war and internees mixed up with Fascists and anti-Fascists, Nazis and anti-Nazis, and that this ship was overloaded? Is he also aware that it had not sufficient lifeboats or apparatus, and does he consider that that is in keeping with the British sense of justice?

Mr. Cross: The earlier part of the hon. Member's question related to the selection of the persons who were on board. That is a matter for my right hon. Friend the Secretary of State for War and would not justify the holding of a judicial investigation under the Merchant Shipping Act. As to the latter part of the question, if the hon. Member has heard that there were not adequate apparatus and lifeboats for all on board, that is not the case. There were lifeboats for 750 persons and buoyant and raft apparatus capable of supporting 1,088 persons, against the total of 1,569 persons on board. There were also 2,000 life jackets as well as life-saving equipment for the crew.

Mr. Kirkwood: Will the right hon. Gentleman tell the House how these people could get at the lifeboats when they were locked below?

Mr. Cross: It is not true that they were locked below.

Mr. Kirkwood: Do I understand the right hon. Gentleman to say that the statement of mine is not true—

Mr. Speaker: The Minister has just said that the hon. Member has been misinformed.

Mr. Graham White: asked the Prime Minister whether the next of kin of all those lost on the "Arandora Star" have now been informed; and, if not, whether he will direct the Department or Departments concerned to complete the task without further delay?

The Lord Privy Seal (Mr. Attlee): As my right hon. Friend the Home Secretary said in reply to a Question on 1st August, steps have already been taken to notify the names of the missing to the Swiss and Brazilian Legations and to the Refugee Organisations, with a view to the next of kin being informed. In addition, any information available will be supplied to any next of kin who apply to the Special Information Bureau which will be opened next Monday at St. Stephen's House, Westminster.

Mr. White: Does not the right hon. Gentleman agree that it is the responsibility of those who were responsible for the shipments to notify the next of kin, and, further, is he seized of the fact that in their anxiety and anguish to know what has happened to relatives, people are now writing to Members of Parliament and asking them to look at the list in the Library; and is it the duty of Members of Parliament to give that information?

Mr. Attlee: The hon. Gentleman will realise that, as was stated by my right hon. Friend the Home Secretary, every endeavour is being made to inform the next of kin, but in some cases it is very difficult to find out who are the next of kin.

Miss Rathbone: Will the right hon. Gentleman take the simple means of announcing over the wireless and through the Press the two Legations to which applications should be made, as this would save a great deal of trouble?

Mr. Attlee: I will pursue that matter.

Rear-Admiral Beamish: Is there any truth in the rumours that there were a


great many people on board the "Arandora Star" who impersonated other people still in this country?

Mr. Attlee: That is another question.

Oral Answers to Questions — ECONOMIC WARFARE.

CONTRABAND CONTROL (SYRIA).

Mr. Price: asked the Minister of Economic Warfare whether the control of merchandise to and from French Colonies by means of navicerts, as recently announced, applies also to the French mandated territory of Syria?

The Minister of Economic Warfare (Mr. Dalton): The seaborne trade of Syria has now shrunk to such an extent that no special measures of control are considered necessary. I am, however, keeping a careful watch on the situation. The navicert system does not, in any case, apply to the French Colonies or mandated territories.

Mr. Price: Do I take it that my right hon. Friend is satisfied that no oil is likely to get out of Syria, overseas, to Italy?

Mr. Dalton: Yes, Sir, I am quite satisfied about that at present, but if I cease to be satisfied, I shall seek powers to deal with the matter.

SURPLUS COMMODITIES, NON-EUROPEAN COUNTRIES.

Mr. Levy: asked the Minister of Economic Warfare whether, in view of the glut of commodities in the non-European continents through the British encirclement of the Continent of Europe, he is prepared to convene a conference of the exporting countries of primary commodities in order to arrange for the orderly marketing of their supplies in the United Kingdom?

Mr. Dalton: As I informed my hon. Friend the Member for the Forest of Dean (Mr. Price) on 30th July, a Ministerial sub-committee of the Economic Policy Committee is now considering the whole question of surpluses. I will bring my hon. Friend's suggestion to the notice of the sub-committee. Imports of primary commodities into the United Kingdom are already regulated by my

Noble Friend the Minister of Food and my right hon. Friend the Minister of Supply.

Mr. Levy: Would it not tend to economy in buying by this country if this conference were convened?

Mr. Dalton: I have already indicated to my hon. Friend that that particular part of the matter is outside my Department, and under the control of my right hon. colleagues whom I mentioned in the last part of the answer.

Mr. Stokes: What does the hon. Gentleman who put the Question down mean by "encirclement of the Continent of Europe"?

Oral Answers to Questions — BRITISH ARMY.

HOSPITAL-DISCHARGED SOLDIERS (LEAVE).

Sir Robert Young: asked the Secretary of State for War whether the matter of wounded soldiers discharged from hospitals, travelling long distances to report at their depots before going on leave to their homes in distant places, has received his promised consideration; and, if so, with what result?

The Secretary of State for War (Mr. Eden): An instruction has now been issued authorising the grant of leave direct to their homes for men recommended for such leave on their discharge from hospital.

Sir R. Young: I thank my right hon. Friend for his answer.

CONSCIENTIOUS OBJECTORS.

Sir R. Young: asked the Secretary of State for War whether he has obtained particulars of the statement made by a conscientious objector to the Bristol tribunal that he received nine weeks' wages and did no work; whether the man and his foreman have been traced; and whether in such cases the tribunal is expected to report such cases to the War Office or the Ministry of Labour?

Mr. Eden: I have ascertained that the man was employed from 21st September to 10th November, 1939, as a carpenter's labourer. His rate was 1s. 2d. an hour, and he was paid £18 3s. 2d. in all. The foreman has been traced but states that several hundred men have passed through


his hands since last September and that he cannot remember any individual employé by name. It is not possible, therefore, to prove or disprove the man's statement. As regards the last part of the Question, if any point arises out of an application or at a hearing which the tribunal wish to have brought to the notice of the Department concerned, it is reported to the Ministry of Labour, who would take the necessary action.

Sir R. Young: Are any records kept by the Government as to the men employed on these contracts?

Mr. Eden: They would not be kept by the Government, but they would be kept by the contractor.

RECREATION.

Mr. Woodburn: asked the Secretary of State for War whether he will issue a general instruction to commanding officers that the maintenance of healthy discipline is best secured by permitting, in free hours, all forms of clean recreation, and that it is harmful to discipline to place out of bounds dances and sport without evident reason, leaving in country areas less desirable places as the only recreation?

Mr. Eden: All forms of healthy recreation are permitted and encouraged in all units in free hours. The circumstances determining what places should be put out of bounds vary in different localities, and commanding officers must have discretion in the matter. I have no information that this discretion is not being properly exercised.

Mr. Woodburn: Is the Minister aware that in at least one district and probably others this discretion is exercised to the extent that visits to cinemas and dances and anywhere outside the local "pub" are not possible for soldiers?

Mr. Eden: I am not aware of that, but the commanding officer must have discretion in this matter. If the hon. Gentleman has some particular case in mind, I shall be very glad to look into it.

Sir Percy Harris: Is the right hon. Gentleman aware that the N.A.A.F.I. have lately had instructions from headquarters to cut down the entertainment they provide?

Mr. Eden: That is an entirely different Question.

Mr. Woodburn: Will the Minister give a lead to commanding officers to use modern discipline instead of this 1852 stuff?

Mr. Eden: I really cannot accept the charge against commanding officers. There are very difficult circumstances, and I am sure they use their discretion. As I have said, if the hon. Gentleman has any case in mind, I will inquire into it.

Mr. Mathers: Does the right hon. Gentleman regard visits to public houses as coming under the heading of "healthy recreation"?

HOME GUARD.

Mr. Lyons: asked the Secretary of State for War whether he will consider the issue of light emergency rations for all outlying posts or watchers of units of the Home Guard where there is a possibility of periods of extended duty in emergency?

Mr. Eden: Arrangements are already being made to ensure this.

Rear-Admiral Beamish: asked the Secretary of State for War whether he will make an announcement, for the information of the Home Guard and the public, of recent decisions and future intentions concerning clothing, equipment, rations, compensation, capitation grants, etc., together with proper information as to the present situation as affecting this force?

Mr. Eden: Detailed instructions on some of the points specifically referred to by my hon. and gallant Friend were issued on 24th June, and further instructions on these and other points will be issued very shortly. As regards the last part of the Question, I would refer my hon. and gallant Friend to the full statement that I made in the House on 23rd July in answer to a Question by my hon. Friend the Member for Seaham (Mr. Shinwell).

Rear-Admiral Beamish: Is my right hon. Friend aware that there is a considerable amount of distress and disappointment at the slowness with which they are getting these decisions made?

Mr. Eden: I hope not. On the whole, the account that I have received is that they have made extraordinarily good progress in a very short time.

Sir Cooper Rawson: Is my right hon. Friend aware that these men have to wear a lot of old clothes underneath?

Mr. Eden: Yes, Sir.

AUXILIARY TERRITORIAL SERVICE.

Miss. Ward: asked the Secretary of State for War what is the percentage of personnel discharged from the Women's Auxiliary Territorial Service since the beginning of the war; and what is the corresponding percentage for the Territorial Army?

Mr. Eden: Discharges from the Auxiliary Territorial Service have been at the rate of about 2 per cent. a month, mostly on compassionate grounds. I regret that separate figures for the Territorial Army have not been recorded.

Pay Allowances.


Daily Rates.


—
Pay.
*Lodging allowance.
*Fuel and light allowance (average).
*Ration allowance.



s.
d.
s.
d.
s.
d.



Chief commandant
…
28
8
4
6
2
6
11d. to 2s. 2d., varying according to circumstances and not according to rank.


Senior commandant
…
19
0
4
0
1
5


Company commander
…
11
0
2
6

8


* Lodging, fuel, light and rations are usually provided in kind.

BATTLE EXPERIENCE (INFORMATION, YOUNGER REGIMENTAL OFFICERS).

Mr. Liddall: asked the Secretary of State for War what steps he has taken to ensure that the strategy and tactics by mechanised columns working with aircraft and infantry used by the Germans in Poland and the battle of France are made known to the younger regimental officers of the British Expeditionary Force and persons other than those at the War Office and the staff college, so that plans by independent expert investigators to meet the German methods and surprises may be thought out well in advance?

Mr. Eden: A number of steps have been taken to ensure that the lessons from experience of the most recent fighting are made available to officers and men. It would not be in the public interest to give an account of these, but I can assure

Miss Ward: asked the Secretary of State for War what are the pay and allowances of a major-general, colonel, major and captain, respectively, in the Women's Auxiliary Territorial Service?

Mr. Eden: With the hon. Lady's permission, I will circulate a statement in the OFFICIAL REPORT.

Following is the statement:

The pay of the Chief Controller, Dame Helen Gwynne-Vaughan, whose rank is equivalent to that of major-general, is under review. At present, she is being paid the same amount as she received in her civil appointment. No officer of the Auxiliary Territorial Service is employed in the rank corresponding to colonel. The pay and allowances of chief commandants, senior commandants and company commanders, ranking with lieutenant-colonels, majors and captains respectively, who accept a general service liability, are as follow:

my hon. Friend that full information is given in widely issued pamphlets and by means of lectures.

Captain Bellenger: Is it not the case that the younger regimental officers of the British Expeditionary Force are just the ones who have this experience, and is opportunity freely given, particularly in the training department of the War Office and the Staff College, to those who have had that experience?

Mr. Eden: It is precisely these officers who are giving the lectures.

BRITISH EXPEDITIONARY FORCE (ACCOUNT OF OPERATIONS).

Mr. Cocks: asked the Secretary of State for War whether it is proposed to issue a full despatch giving a detailed account of the operations of the British Expeditionary Force in France and Flanders?

Mr. Eden: Despatches from Lord Gort and other Commanders covering the whole period of the British Expeditionary Force have been received. The question of their ultimate publication is under consideration, but it would not be in the public interest to issue them at present.

Mr. Cocks: In view of the fact that piecemeal descriptions of certain parts of the operations are being released from time to time, would it not be possible to issue a description of the complete campaign, however abbreviated?

Mr. Eden: That has been considered. The difficulties at this time are rather exceptional, especially in relation to what has happened in France, and developments in that country.

ENTERTAINMENTS.

Mr. Lyons: asked the Secretary of State for War (1) what amounts have been paid to officers or organisers of Entertainments National Service Association and their names and positions; or what arrangements for payment have been made, respectively, since its establishment in the present war to the most recent convenient date, from moneys received by that association in charges made for admission;
(2) the amount received to date from admission charges by the Entertainments National Service Association and the amounts paid to artistes therefrom since its establishment during the present war and the amounts paid in administrative fees during that time?

Mr. Eden: No payments are made to members of the Entertainments National Service Association as such. The entertainments given to the troops are organised by the Navy, Army and Air Force Institutes, and the organising staff is provided by them. The Navy, Army and Air Force Institutes is registered under the Companies Acts as a company, trading not for profit, and in common with similar bodies is not called upon to furnish details of salaries paid. The sum received from admission charges to the end of July is about £78,000, and payments made to artistes during the same period amount to about £150,000. The receipts were taken and the payments were made by the Navy, Army and Air Force Institutes.

Mr. Lyons: What positions are occupied by Sir Seymour Hicks and Mr. Basil Dean, what amount of salary is paid to them, and from what source does the money come?

Mr. Eden: I could not answer all that without notice, but I can say that none of the artistes, however widely known or talented, who have been serving in this way has received more than fro a week.

Mr. Lyons: Do I understand that no official has received more than that salary?

Mr. Eden: Perhaps my hon. and learned Friend would not mind putting that question down.

Commander Locker-Lampson: Is not Sir Seymour Hicks worth far more than £10 a week, and has he not given his services right and left?

Major Lloyd: asked the Secretary of State for War whether, in order to ensure the co-ordination of all welfare activities on behalf of the troops under one head, he will direct that the activities of the Entertainments National Service Association are placed under the control of the Director-General of Welfare?

Mr. Eden: Discussions are proceeding on this subject.

CAMP CANTEENS.

Mr. Lipson: asked the Secretary of State for War whether he will arrange that a canteen shall be set up at every camp where troops are stationed?

Mr. Eden: It is our aim to set up a canteen run either by the Navy, Army and Air Force Institutes or by one of the voluntary bodies wherever the numbers justify it, and to arrange for mobile canteens to visit the smaller concentrations of troops. In view of the large number of troops which has recently returned to this country and the revised distribution to meet present requirements, it will be appreciated that it has not yet been possible to provide adequate canteen facilities in all areas, but all possible steps are being taken to remedy any deficiencies.

Major Cazalet: Will my right hon. Friend see that they are allowed to run their own canteens?

Mr. Eden: That is a different question.

PALESTINIANS.

Mr. Wedgwood: asked the Secretary of State for War, whether the man-power of Palestine is being, or will be, organised into a combatant force?

Mr. Eden: Palestinians are eligible to enlist in various combatant units of the British Army. In addition to this, arrangements are now being made, as the outcome of a recent decision, to form a number of Palestinian companies of units of the British Army.

Mr. Wedgwood: In view of the serious situation in Syria, could not far more extensive use be made of the services of these people?

Mr. Eden: I should not like to connect the decision with any particular series of events. The right hon. Gentleman will appreciate that this is a new departure which I have just announced.

Mr. Stokes: Will the people so enlisted in the Palestinian units be required to serve wherever they may be now, and not merely in Palestine, whether Jews or Arabs?

Mr. Eden: Perhaps the hon. Member will put down a Question about the conditions of service.

MANCHESTER REGIMENT (REPAYMENTS).

Mr. Burke: asked the Secretary of State for War why non-commissioned officers of the Manchester Regiment, who were derated solely because Regular Army non-commissioned officers were drafted to the battalion, are having to pay back from their present privates' pay money which was paid them for acting as non-commissioned officers?

Mr. Eden: I have ascertained that, in four of the five cases concerned, the soldiers have now been granted war substantive rank which cancels the over-issues. The fifth case is still the subject of inquiry, but I have given instructions that no recovery is to be made.

DEPENDANTS' ALLOWANCES (RECOVERY OF OVER-ISSUES).

Mr. Burke: asked the Secretary of State for War whether he will reconsider the case of Mrs. Johnston, who, between 10th May and 22nd July, received three Army forms instructing her to return her order books owing to mistakes in the amount of proficiency pay awarded to

Private Johnston, 3382390, by his commanding officer, and who has paid back 42s. 6d., recovered 40s., and is now paying back 74s. by a reduction of 5s. in her weekly allowance; and will he take steps to prevent these numerous errors which cause hardship to soldiers' dependants?

Mr. Eden: I regret that an erroneous interpretation of the regulations, as they affect this case, by the soldier's unit and by the pay authorities has twice resulted in the issue to the dependant of amounts in excess of her entitlement, involving recovery of the over-issues from the current allowance. In view of the exceptional circumstances of this case, I have given instructions that further recovery of the amount over-issued in error should be waived, and the full amount in issue prior to the original mistake restored.

Mr. Burke: Can anything be done to prevent these errors, which are numerous, and does the right hon. Gentleman realise that for a woman with a family, to get 5s. a week stopped out of 40s. is an extraordinary hardship? If it can be prevented, something should be done.

Mr. Eden: I am afraid it is true that there have been difficulties, mainly arising out of the very rapid expansion of the Army. This is one of the problems which I hope the committee which is working at the War Office will help us to resolve.

Mr. Gallacher: Does not the right hon. Gentleman think that the waiving of claims to repayments would be the best way to stop such mistakes being made?

DISCHARGED SOLDIER (ALLOWANCES).

Mr. Burke: asked the Secretary of State for War when the hon. Member for Burnley may expect a reply his letter of 4th April and his reminder of 18th June concerning Private J. E. Clayton, 2184114, Royal Engineers, who volunteered on 5th September, was sent to France early in October, invalided home for operation in March and finally discharged 19th April, since when he has received only 30s., with the result that his wife and four children are being kept by the public assistance committee?

Mr. Eden: I regret that my hon. Friend has not yet received a reply to his letters on this case, the investigation of which has only just been completed. I am now able to inform him that Mr. Clayton has


received all the money to which he is entitled from Army funds, having been paid £9 9s. 6d. during the month of March, and his account is, in fact, in debt to the extent of £3 10s. 10d. The appropriate documents were sent, on 6th April, to the Ministry of Labour and the Ministry of Health, in order to enable him to apply for any benefits to which he might be entitled on ceasing to draw Army pay and allowances.

DESTRUCTION OF TREES (SURREY).

Mr. Touche: asked the Secretary of State for War whether he is aware of the widespread destruction of fine trees by the military in a certain district in Surrey, of which he has been informed; and whether he will give an assurance that such destruction will be limited to military necessities and that, subject to this, regard will be given to the preservation of the amenities of this district?

Mr. Eden: I am advised that the destruction of trees to which my hon. Friend refers is required in the interests of defence. I can, however, assure him that the most explicit instructions have been issued for the avoidance of any unnecessary interference with amenities.

COMMANDEERED MOTOR OMNIBUSES, NORTHERN COMMAND.

Mr. Benson: asked the Secretary of State for War whether he is aware that there is considerable indignation among local authorities in the Northern Command at the excessive rate paid by the War Office for motor omnibuses when commandeered; and whether he is prepared to reduce the payment to a reasonable rate?

Mr. Eden: I am not aware of any indignation on this subject among the local authorities in the Northern Command. On the contrary, complaints have been received from operators that the rates are inadequate.

Mr. Benson: Has the right hon. Gentleman consulted any local authorities in fixing these rates?

Mr. Eden: Yes, Sir. These hirings are carried out in close liaison with the Regional Traffic Commissioner of the Ministry of Transport with the object of reducing interference with the normal omnibus services, and rates are negotiated locally.

Mr. Benson: In view of the unsatisfactory nature of the reply, I shall raise this matter on the Adjournment at the earliest possible moment.

INTERNEES.

Mr. Wedgwood: asked the Secretary of State for War why Dr. Celina Korn, of 57, Cleveland Square, W.2, has been refused information as to the whereabouts of Dr. Heinrich Walter, last heard of at Kempton Park internment camp on 25th June?

Mr. Eden: Dr. Heinrich Walter left this country for Canada on the steamship "Ettrick" on 3rd July. I am assured that this information was given to Dr. Korn on the telephone by an officer in my Department some time ago.

Sir P. Harris: asked the Prime Minister whether he is now able to state who was responsible for the organisation of internee camps and the distribution of aliens in the various centres, as well as the compilation of lists showing the location of individuals?

Mr. Attlee: The responsibility for the matters mentioned by my right hon. Friend rested with the War Office.

Sir P. Harris: Has the right hon. Gentleman made inquiries to find out who were the individuals responsible for the organisation of these camps and the failure to compile lists?

Mr. Attlee: Inquiries are going on now.

PROHIBITED AREA, SCOTLAND (VISITS).

Mr. Woodburn: asked the Secretary of State for War why permits were refused to visit the North of Scotland to William Kerr, 12, Front Street, West Calder, and his brother, and how this accords with the assurance given that establishing the North of Scotland as a prohibited area did not mean the complete extinction of holidays or visits by loyal persons in that part of the country?

Mr. Eden: I am making inquiries, and will write to my hon. Friend as soon as possible.

Mr. J. J. Davidson: Will the Minister keep in mind that, very generally, the


permits officers in Glasgow and Edinburgh refuse people permits because they say they have had definite instructions that none must be granted if holidays are given as the reason for asking for a permit?

Mr. Eden: There may be reasons which I would rather not refer to in public.

TOBACCO, CIGARETTES, ETC.

Mr. Leach: asked the Secretary of State for War whether he is aware that new recruits who have forfeited lucrative jobs and now find themselves unable to afford cigarettes and tobacco, postage and other amenities, while observing their prototypes in civil life are not similarly deprived, cannot be expected to maintain the spirit of contentment necessary for the preservation of the highest morale, and if he will reconsider the question of issuing a ration of tobacco or cigarettes coupled with some concession in postage rates?

Mr. Sorensen: asked the Secretary of State for War whether he has now any statement to make respecting free or cheaper supplies of tobacco and cigarettes for the troops; whether he will abolish or reduce the charge to soldiers for breaking crockery and also for haircutting; and whether he will consider reducing the amount of stoppages during the period of the war?

Mr. Eden: As regards cigarettes, tobacco and postage, I am unable at present to add to the answer given by my right hon. Friend the Chancellor of the Exchequer to my hon. Friends the Members for Seaham (Mr. Shinwell) and West Leyton (Mr. Sorensen) on 30th July. The soldier as a result of a decision recently taken now receives an allowance to cover hair cutting, and breakages of crockery not caused wilfully or through neglect of reasonable precautions are made good within limits at the public expense. As regards other charges, commanding officers are instructed to keep them under review and to eliminate any expense to the soldier that is unnecessary.

Mr. Leach: Does not the right hon. Gentleman realise that there is a sense of injustice in this matter on the part of the soldier, and, if so, what steps can he possibly take to remedy it?

Mr. Eden: We have taken steps. This special allowance was issued on 3rd July.

Mr. Sorensen: Does the right hon. Gentleman realise that in numerous cases the soldier finds deducted from his small pay 2s. or 2s. 6d., and that in these circumstances he has little left to spend on small requirements?

Mr. Eden: I think the hon. Member generalises too widely. Special arrangements are made. They have been in force only for a month, and we must see how they work.

Mr. Denville: If the Treasury will give the right hon. Gentleman the money, will he give the soldiers the cigarettes?

Oral Answers to Questions — NATIONAL FINANCE.

BEER DUTY (ARMED FORCES).

Sir William Wayland: asked the Chancellor of the Exchequer whether, in view of the present prohibitory price of beer and the inability of the men of His Majesty's Forces to afford to buy it out of their pay, he will be prepared to allow a rebate of 2d. per pint off the present duty to all Navy, Army and Air Force canteens?

The Chancellor of the Exchequer (Sir Kingsley Wood): I regret that I am unable to accept my hon. Friend's proposal.

Sir W. Wayland: Is the Chancellor of the Exchequer aware that owing to the excessive Beer Duty three pints of ordinary beer to-day represent a day's pay of a soldier?

GOVERNMENT DEPARTMENTS (COMMODITY COSTS).

Mr. Nunn: asked the Chancellor of the Exchequer what steps he is taking to prevent increases in cost of goods supplied to Government Departments now that the 100 per cent. Excess Profits Tax has removed the financial incentive to economies in costs of production?

Sir K. Wood: I appreciate my hon. Friend's anxiety that the existence of the Excess Profits Tax should not be permitted to result in increased costs to the State. So far as concerns fixed price contracts, the incentive to economical production is not removed by the existence of this tax at 100 per cent. In the case of


other contracts I rely upon the normal system of price fixing and of supervision of work in progress to obviate the danger to which my hon. Friend refers. Every effort is made to ensure that profit is not independent of efficiency and economy in production.

OLD AGE PENSIONS (WAR SAVINGS).

Mr. R. J. Taylor: asked the Chancellor of the Exchequer when it is proposed to give effect to the undertaking that war savings shall be disregarded in the administration of the household means test; and whether the necessary legislation will be retrospective?

Sir K. Wood: The legislation necessary to give effect to the undertaking is in active preparation and will be introduced as soon as possible. Savings made between 3rd September last and the date of operation of the Act will, of course, be taken into account in dealing with subsequent claims. In other respects I am afraid that it will be impracticable to make the legislation retrospective.

Mr. Taylor: Will the Chancellor of the Exchequer make it clear whether investments made after 3rd September will be differentiated as against those investments made before that date?

Sir K. Wood: I will have regard to that in considering the terms of the Bill.

Mr. Lawson: Has the Chancellor of the Exchequer taken steps to make this known to all old age pensioners, because there is a very great deal of disturbance in regard to this matter?

Mr. A. Bevan: Does the Chancellor realise that if a distinction is made between the old War Loan and the new, there will be a tendency to convert from the old War Loan to the new? Will he bear that in mind?

Sir K. Wood: Yes, Sir, I will have regard to that.

Mr. Taylor: Will the right hon. Gentleman also bear in mind that when this pledge was given to the old people they immediately began investing in War Loan, and that if the Bill is not made retrospective to cover these amounts, the old people will look upon it as a breach of faith?

Sir K. Wood: Certainly there will be no breach of any undertaking. I hope the Bill will be available in a few days.

Mr. George Griffiths: Is the Chancellor aware that the old people are refused the supplementary allowance because they have these War Loan savings, and they are not getting supplementary allowances to-day?

Sir K. Wood: That is another matter.

Mr. Gallacher: Has not the Chancellor made it clear that it is new savings which are being dealt with?

SUEZ CANAL COMPANY.

Mr. De la Bère: asked the Chancellor of the Exchequer whether, as board meetings of the Suez Canal Company are in abeyance, he can make some statement as to the intentions of the directors of this company as to receiving their fees of between £3,000 and £5,000 a year; and whether steps have been taken to safeguard the assets and reserves of the company, held in Paris, against any outside efforts to lay claim to these assets for utilisation by the enemy?

Sir K. Wood: I understand that, in present circumstances, the question of current fees is being left in abeyance so far as the British directors are concered. I have no knowledge of the attitude that is being adopted by the other members of the board. My hon. Friend will appreciate that the greater part of the directors' fees depends on the net profits of the company. As regards the second part of the Question, the assets and reserves of the company held in Paris are in French francs and cannot therefore add to the enemy's external resources. The greater part of the company's assets and reserves are, however, held in the United Kingdom and the United States of America, and are, therefore, blocked under the general measures which have been taken by ourselves and the United States Government.

Mr. De la Bère: Can my right hon. Friend say whether the general position of the Anglo-French Commission with regard to the Canal is satisfactory, and whether they are co-operating with the English and Egyptian Forces?

Sir K. Wood: I will make inquiries.

EVACUATED AREAS (COMPENSATION).

Sir Frank Sanderson: asked the Chancellor of the Exchequer whether he will consider compensation being given to businesses closed down owing to war conditions, where, in pursuance of war aims and in the national interest the Government was compelled to request certain areas to be evacuated and provided some means of relief to the inhabitants and traders of these areas?

Sir K. Wood: I am afraid that there are many businesses which have been injured or closed as a result of war measures or war-time restrictions, and I cannot hold out any hope that those affected by evacuation can be given exceptional treatment by way of compensation.

Sir F. Sanderson: Is my right hon. Friend aware that there is really grievous hardship being suffered by countless thousands of people; and, in view of the fact that in other parts of the country, in reception areas, they are deriving benefits, will he not consider, by some means or other, assisting these people who are in a position of dire distress?

Sir K. Wood: I very much regret that, but my hon. Friend will appreciate the difficulties in drawing a distinction.

Mr. Shinwell: Will not the Chancellor attach rather more importance to this subject than he appears to have been doing? If these people cannot be absorbed in the war effort and given compensation, could not at least the principle of a moratorium be applied?

Sir K. Wood: I hope I have given no impression that I am unmindful of this matter; I hope it is to the contrary. I was dealing with the proposal on the Paper, and it will be agreed that there is great difficulty in differentiating between businesses lost in one way and businesses lost in another.

Commander Locker-Lampson: Cannot the Chancellor give an answer in regard to a moratorium? Why was not a moratorium introduced earlier in the war?

Sir K. Wood: That is another matter.

PURCHASE TAX (SPECTACLES).

Mr. Rhys Davies: asked the Financial Secretary to the Treasury whether

spectacles will be exempt from the Purchase Tax?

The Financial Secretary to the Treasury (Captain Crookshank): It is not proposed that the Purchase Tax should apply to spectacles as such or to lenses used in spectacles. Spectacle frames will not be taxed unless made from luxury materials such as tortoiseshell and gold.

Viscountess Astor: Will the right hon. and gallant Gentleman also bear in mind the exemption of ear trumpets, as so many of us may need them before the war is over?

UNCLAIMED BANK BALANCES.

Mr. De la Bère: asked the Financial Secretary to the Treasury whether, in connection with the unclaimed bank balances, he can give some figure as to the approximate amount in the aggregate of these in February, 1940?

Captain Crookshank: The Select Committee on the Dormant Bank Balances and Unclaimed Securities Bill, 1919, reported that the balances in all the banks standing in the name of persons who could not be traced amounted to less than £3,000,000. As balances of this type accumulate very slowly, there is no reason to suppose that the total amount to-day can be of a different order of magnitude.

Mr. De la Bère: Will my right hon. and gallant Friend be kind enough to make further inquiries with a view to giving a more approximate and more up-to-date figure than a figure 20 years old?

Captain Crookshank: My answer shows what the kind of size of these balances is, and really there are more important things to be done to-day.

Mr. Stokes: Does the Financial Secretary mean by identification that if he could identify a dead man, the balance would be regarded as identifiable?

DEPENDENT CHILDREN (ARMED FORCES).

Mr. Mathers: asked the Financial Secretary to the Treasury whether the most recently announced allowances to soldiers' dependent children will also apply to naval and Air Force personnel, and from what date?

Captain Crookshank: I assume that the hon. Member refers to the concession in regard to dependent children announced


by my right hon. Friend the Secretary of State for War on 30th July. The concessions, which will apply also to the dependent children of sailors and airmen will take effect from the family allowance pay day nearest to the date of the announcement.

Mr. Mathers: In view of the long time taken by the Treasury to make this concession, does not the right hon. and gallant Gentleman think that it ought to go back a little further?

Captain Crookshank: No, Sir; it cannot go back beyond the date I have mentioned.

BRITISH COUNCIL.

Mr. De la Bère: asked the Prime Minister whether, with a view to increased efficiency and preventing overlapping, he w ill consider merging the organisation of the British Council into the Ministry of Information?

Mr. Attlee: No, Sir. I do not see that it would increase efficiency to merge the two organisations. An arrangement has recently been come to and agreed between the two organisations to obviate any risk of overlapping.

Mr. De la Bère: Can the right hon. Gentleman tell us exactly where the sphere of usefulness of the British Council really begins, and what it does with its money, since there have been very few results to show for the large sums expended?

Mr. Attlee: I cannot give a full account, as it would be too long for a Parliamentary answer, but the British Council was formed for the purposes of making the English language and British culture better known in other countries. The Ministry of Information has the function of presenting the British case to the world. The one institution is cultural, and the other is political.

Mr. Graham White: Was not the object for which the British Council was started also to propagate the very ideals for which this country is at war?

Mr. Maxton: The right hon. Gentleman referred to both these organisations as institutions. Are the British Council and the Ministry of Information actually of

the same status in the eyes of the Government, and is "institution" the recognised term for the Ministry?

Mr. Attlee: The word "organisation" would cover both.

Mr. Lipson: Has the right hon. Gentleman taken into account how the work of the British Council in spreading British culture abroad will be hampered by a tax on books?

PROSECUTION OF THE WAR (JOINT ALLIED COUNCIL).

Mr. Mander: asked the Prime Minister whether he will consider the advisability of setting up a joint allied council for the prosecution of the war, including the Governments of Czecho-Slovakia, Poland, Norway, Holland and Belgium, together with representatives of such other countries, as France, as are giving armed assistance to the Allied cause?

Mr. Attlee: His Majesty's Government are fully alive to the importance of the object set out in my hon. Friend's Question. The existing arrangements for cooperation and consultation between His Majesty's Government and other Governments and organisations fighting with us against the enemy are, however, proving fully adequate to deal with all questions concerning the prosecution of the war. I do not, therefore, see any advantage at present in setting up additional machinery for the purpose.

Mr. Mander: Is there any one council on which all these countries are represented together? Would it not be desirable psychologically that such a body should be set up?

Mr. Attlee: I have nothing to add to my reply.

Mr. Mander: Am I to understand that there is no body on which all are represented at present?

TRADING PROFITS ON FOOD.

Mr. Ellis Smith: asked the Prime Minister whether he has considered the Motion on the Order Paper dealing with profits on food: and will he give time to enable the House to consider the issues raised in that Motion?

[That this House, aware of the great effort being made by all who are engaged in the supply industries, and of the sacrifices being made by those who are serving in the Armed Forces and their dependants, considers that increased dividends should not be allowed to be paid by departmental stores; notes that Lever Brothers and Unilever, in the year 1939, increased their profits by £2,250,000 and paid a dividend of 10 per cent.; that the amount retained by the subsidiaries was double; that the amount placed to contingencies reserve was increased seven times; while the amount carried forward was substantially increased; calls on the Government to put an end to this trading in food, which is unfair to the nation and the Navy who organise convoys to bring supplies for the people; and is of the opinion that immediate action should be taken to cut all overhead charges on the people's needs to a minimum.]

Mr. Attlee: I regret that I am unable to provide special facilities for the discussion of the Motion standing in the name of my hon. Friend.

POST-WAR RECONSTRUCTION.

Mr. Craven-Ellis: asked the Prime Minister whether he will now give consideration to the appointment of a Minister of Industry and Economic Reconstruction at an early date, with the responsibility of examining and working out plans with local authorities and industry which will give employment to His Majesty's Forces when returning to civilian life, as well as to those now employed on the manufacture of arms and munitions?

Mr. Attlee: The matter my hon. Friend refers to is of importance, but it is too early to decide whether a separate Ministry of the kind proposed will be desirable.

Mr. Craven-Ellis: Is it appreciated that to reorganise for peace may take us even longer than to organise for war, and that the matter is one which should have immediate attention?

Mr. Attlee: That point is quite appreciated.

Mr. Stokes: Will my right hon. Friend say whether any body at all is studying reconstruction after the war?

MINISTRY OF INFORMATION.

Mr. Granville: asked the Prime Minister whether he will now discontinue the existing functions of the Ministry of Information, and reorganise this Department under appropriate direction as a Ministry for Political Warfare, to enable it to play an effective part in the vigorous prosecution of the British war effort abroad?

Mr. Attlee: No, Sir.

Mr. Granville: Is the right hon. Gentleman aware that there is a great deal of feeling that the usefulness of this Department on the home front is now exhausted, and that its true function lies in stating the British case abroad?

Commander Locker-Lampson: Is the right hon. Gentleman aware of the danger of picking up German leaflets which have been dropped and broadcast, not because of any contamination from reading them, but because of contamination physically by poison which may spread disease and death?

Mr. Attlee: That is another question. Perhaps the hon. and gallant Gentleman will put it on the Paper.

Mr. Stokes: Has the right hon. Gentleman's attention been drawn to the latest leaflet of the Ministry of Information on "staying put"?

GERMAN AND AUSTRIAN CIVILIAN INTERNEES.

Mr. Wedgwood: asked the Prime Minister whether he will give time for the discussion of the Motion on the Paper concerning the White Paper and Refugees, in the name of the hon. Member for Newcastle-under-Lyme?

[That, in the opinion of this House, the White Paper issued by the Home Secretary giving the categories under which so-called enemy aliens may be set free is entirely unsatisfactory in that it will leave most of those who have the greatest reason to oppose Hitler interned, and that it is based on the utility of the internee and not on his or her innocence.]

Mr. Attlee: No, Sir. I do not consider that any useful purpose would be served at present by discussion of the Motion standing in the name of my right hon. Friend.

INDIA AND COLONIES (DEFENCE CONTRIBUTIONS).

Mr. Cary: asked the Prime Minister, in view of the increasing significance of military operations in Africa, whether he can indicate to the House when he will be in a position to make an adequate statement on the whole question of the defence contributions of India and the Colonies?

Mr. Attlee: I would refer my hon. Friend to what I said on Thursday last arising out of the statement on Business. I have at present nothing to add to that statement.

FOREIGN POLICY (DOMINIONS).

Mr. Hannah: asked the Prime Minister whether he can give an assurance that His Majesty's Government in the United Kingdom will not enter into any permanent obligations on the Continent of Europe without the fullest consultation with His Majesty's Governments in the Dominions?

Mr. Attlee: Yes, Sir. I can assure my hon. Friend that we have maintained, and shall continue to maintain, the closest touch with His Majesty's Governments in the Dominions on all aspects of foreign policy.

Mr. Hannah: Is not this answer extraordinarily satisfactory?

MR. NOEL COWARD (VISIT, UNITED STATES).

Commander Sir Archibald Southby: asked the Prime Minister on what mission Mr. Noel Coward is engaged by His Majesty's Government; from what Minister does he receive his instructions; whether those instructions directed him to seek an interview with the President of the United States of America; and by whose authority did he make suggestions regarding shipments of food from the United States of America to Europe?

The Parliamentary Secretary to the Ministry of Information (Mr. Harold Nicolson): I have been asked to reply. Mr. Noel Coward has gone to the United Slates on a short visit with the knowledge and approval of my right hon. Friend. So far as I am aware, he did not seek an

interview, but was asked to call on the President with whom he is on terms of personal friendship. Any remarks that Mr. Coward may have made to the Press in regard to the shipment of food to Europe were merely an expression of his personal views.

Mr. Shinwell: What special qualification does Mr. Coward possess to act as a kind of ambassador to the United States?

Mr. Nicolson: Mr. Coward is not acting in the function of an ambassador. His qualifications are that he possesses a contact with certain sections of opinion which are very difficult to reach through ordinary sources.

Mr. Granville: Does the Parliamentary Secretary recognise that this gentleman does not appeal to democracy in America and does not represent democracy in this country, and that he is doing more harm than good, and will he bring him back to this country?

Captain Bellenger: Is the Parliamentary Secretary aware that a feeling is arising in this country that if a man has a certain publicity value and money, he can get out of this country quite easily, often on short visits, and probably not returning, during a time when this country is going through great stress and anxiety?

Mr. Nicolson: I think that is grossly unfair.

Mr. Denville: Is not Mr. Coward only doing what any other Britisher would do in another country, and that is, speaking well of his own?

EXIT PERMITS (MISS GRACIE FIELDS).

Mr. Davidson: asked the Financial Secretary to the Treasury (1) whether he can now say whether any restriction was placed on Mr. Davis, pianist to Miss Gracie Fields, when he left this country recently, affecting the amount of money to be taken out; and, if so, the amount allowed;
(2) whether any restriction was placed on Miss Gracie Fields when she left this country recently, affecting the amount of money and the value of jewellery to be taken out; and, if so, the amount and value allowed, respectively?

Captain Crookshank: I apologise for the length of my reply. No permission was sought by Miss Fields or by Mr. Davis, when they left this country recently, to take money abroad, beyond the small amount, namely, £10, prescribed in the Regulations. The restriction on taking out jewellery, which was imposed on 1st July, did not exist when Miss Fields left the country. Applicants for foreign exchange have often to supply to the authorities very full details of private affairs, and the House will agree with me that, as a general rule, particulars of foreign exchange granted in individual cases should not be published; but in this case I think it is right to state the full facts of the matter.
In October of last year, Miss Fields, who was recovering from a serious illness, applied for a considerable sum in dollars to go abroad. This application was supported by a strong medical recommendation. It was decided that the sum asked for was excessive, but permission was given for a sum of £8,000. This was a large amount, but the circumstances were unusual; and it was expected that Miss Fields, after her recovery, would earn dollars in America which would be surrenderable to the State. Miss Fields was also granted a sum for the support of her parents in the United States, and a further sum to meet life assurance premiums payable in America under a pre-war contract; these allocations were in accordance with normal practice.
In view of the marriage between Mr. Banks and Miss Fields which took place before she recently left this country, and in order to give the complete picture, I think it right to state also the facts in his case. In October Mr. Banks also applied independently for the transfer of roughly £20,000 to America. Mr. Banks' nationality was, at that time, very obscure, but it was decided to treat him as a resident in this country liable to surrender to the State any dollar surplus arising from his business. His application was allowed on business grounds to enable him to carry on his business as a film producer in the expectation that considerable dollar earnings would be surrendered for our benefit. These expectations not having been realised, the decision was not justified by the event, but Mr. Banks remains liable to account for his dollar balances.
In April, 1940, when Mr. Banks and Miss Fields returned to this country, they were at once approached for a statement of account in respect of the dollars which had been allotted. It was made clear that no further exchange would be granted until an account had been rendered. A statement was furnished on behalf of Miss Fields, and a promise was received from Mr. Banks on the 31st May to render an account, but he left the country without doing so, and, without applying for or receiving any allocation of exchange.

Mr. Davidson: May I thank the right hon. and gallant Gentleman for his long and informative reply, and ask him whether during his investigations he received any information with regard to thousands of pounds' worth of diamonds that were bought from the firm of George Music and Sons, of 39, Holborn Viaduct, E.C.1; and is it not true that the principals in this Question have left practically no assets in this country after enjoying its generosity for so many years?

Captain Crookshank: I know nothing about those allegations. I have given a full reply in this case, very much fuller than would be normal, on the points for which the hon. Gentleman asked for information.

Mr. Davidson: Will the right hon. and gallant Gentleman accept this from me and make inquiries with regard to these allegations?

Mr. Gallacher: And take action?

Captain Crookshank: I have already explained that so far as jewellery is concerned, this gentleman and this lady left the country before there was any restriction on taking it out. That was embodied in my reply.

CIVIL SERVICE (CONSCIENTIOUS OBJECTORS).

Sir H. Morris-Jones: asked the Financial Secretary to the Treasury how many declared conscientious objectors are now in the Civil Service; and what is the policy of his Department regarding promotion pending the return of those who are now in the Forces?

Captain Crookshank: The number of civil servants who have been registered as conscientious objectors by the appropriate tribunals, either unconditionally or conditionally on their remaining in their


present occupations, is 249. As I stated on 16th July in reply to my hon. and learned Friend the Member for North Edinburgh (Mr Erskine Hill), men in this position will for the war period be barred from consideration for promotion.

"PENGUIN HANSARD."

Sir Francis Fremantle: (by Private Notice) asked the Financial Secretary to the Treasury by whose direction the issue of the publication of the "Penguin Hansard" has been suspended and whether he has any statement to make?

Captain Crookshank: Permission was given some time ago to Penguin Books, Limited, by the Controller, His Majesty's Stationery Office, who holds the copyright of "Hansard," to include verbatim extracts from "Hansard" in a prospective publication dealing with the Parliamentary history of the war. When a copy of the book was received at the end of last week, it was observed from the wording used that it might give the impression that it was published under Government auspices. This was not the case, since the Stationery Office had taken no part in, or responsibility for, selecting the extracts or editing the book, nor had any Government Department prompted or approved its publication. Further, it seemed possible that the Select Committee on Publications and Debates Reports might wish to consider whether the book, in the form in which it was to appear, complied with the recommendations in their last report as to the production of an abridged edition of "Hansard." I therefore gave instructions on Saturday morning that the distribution of the book must be suspended for the time being, in order that the above points might be considered at once. I am obliged to the publishers for the action which they have taken, at considerable inconvenience, to comply with this request, and I hope that it will be possible to convey to them a definite decision within a very few days. The House will, therefore, understand that the reasons for this action were technical in character. It is, of course, the desire of the Government, as I am sure it is of all hon. Members, that there should be no limit to the publicity given to our Debates, the open Debates of a free Parliament.

Sir F. Fremantle: While thanking my right hon. and gallant Friend for his courtesy to the Select Committee, may I ask whether he agrees with the recommendations of that Committee against the official publication of an abridged "Hansard," and having reported that
the wider knowledge of the activities of Parliament as illustrated in Hansard would he of permanent value to the democratic system,
may I ask whether it was not outside their terms of reference—

Mr. Speaker: That goes a long way outside the scope of the Question.

Sir F. Fremantle: I am asking whether it was not outside their terms of reference to consider unofficial publications.

Mr. Lawson: Are the Government getting any commission on this book for the splendid advertisement they are giving?

Mr. Silverman: May the House be assured that, providing the technical objections which have been raised can be removed, no other objections will be raised?

Captain Crookshank: I know of no other objection. The last sentence in my reply went to show that.

NEW MEMBER SWORN.

Robert Donald Scott, Esquire, for the County of Northumberland (Wansbeck Division).

Orders of the Day — FINANCE (No. 2) BILL.

Order for Second Reading read.

3.50 p.m.

Mr. Stokes: On a point of Order. Before the Debate starts I should like to ask for your guidance, Mr. Speaker. I should like to know whether, in view of the fact that the Debate on the Budget Resolutions was so much restricted, a rather wider discussion will be allowed to-day than is normally allowed, so as to give those of us who had no opportunity of speaking on or criticising the Budget an opportunity to speak, provided, of course, that the speeches are kept within reasonable limits of time?

Mr. Speaker: On the Second Reading of the Finance Bill the scope of the debate is always very wide.

3.51 p.m.

The Chancellor of the Exchequer (Sir Kingsley Wood): I beg to move, "That the Bill be now read a Second time."
This Bill, when the necessary Parliamentary approval has been given to it, will confirm the proposals for new taxation which I recently made in my Budget speech. Such additional taxation, willingly as I know it will be borne, means a still further appreciable increase in the burdens on all sections of the community, both through direct and indirect taxation. There are, no doubt, differing opinions as to whether one class or another of the community is to-day bearing too much or too little, and whether or not still heavier impositions should be immediately made beyond those now proposed, but there is, I would suggest, no doubt that a real and remarkable contribution by way of taxation has been and is being made in an unprecedentedly short period towards oar war effort. When I say that, I do not minimise for a moment the grave problems that confront us, of which I have already spoken when opening the Budget.
We sometimes forget, I think, in endeavouring to appreciate the questions which arise and the course that we should immediately take by way of fresh taxation, the very substantial burdens that have been imposed in the last 10 months. In September, when the first war Budget was presented, the total revenue from

taxes and other sources was estimated to be £888,000,000. As a result of the September and April Budgets and the Budget which I opened a fortnight ago, the estimated total revenue has risen to £1,360,000,000 for the current year, an increase of no less than £472,000,000. But in assessing the real effect of these measures it is necessary to look not so much at the produce of increased charges in the first year as at the produce of a full year, and on that basis the increase in the total revenue over the estimated £888,000,000 for 1939–40 may be put at £650,000,000. That is to say, the total revenue of £888,000,000 will have been raised by nearly three-quarters, or to a figure of the order of £1,500,000,000. As we have seen from the comments made in various countries, this has been rightly regarded not only as a high example of heavy burdens willingly borne but as real and tangible evidence of this country's determination to continue in this struggle until victory has been achieved.
As I have previously pointed out, all this increase of taxation in so short a time has not been effected without hardship and dislocation, which the further increases that are now being made must, of course, in many cases intensify. My right hon. and gallant Friend the Financial Secretary to the Treasury the other day gave examples of the changes in the stages at which the Exchequer takes by Income Tax and Surtax more than half of a person's total income. In the case of married couples with two children, and with earned income, this stage was reached a year ago when the total income was of the order of £17,200. Under the April Budget this year half the total was taken at £8,770, and under my recent proposals the Exchequer takes half when the income is £5,820.
There is another part of the Income Tax scale covering those with incomes between £400 and £800 a year to which I should like to refer. In the case of those incomes, as with others, no doubt further contributions will be necessary, but we should observe what is now being effected under the present Budget proposals. Last year a married man with two children and earned income of £400 a year paid in Income Tax £1 13s. 4d. This year he will pay £15 16s. 8d.

Mr. Benson: What did ht. pay in 1916?

Sir K. Wood: I will look it up. In the case of an income of £500 the tax liability has increased from £8 6s. 8d. to £36 13s. 4d.—four times as much as it was a year ago. On £700 the charge has increased from £45 12s. 6d. to £104 5s. 10d.—nearly 2½ times as much; and on £800 the tax is now £139 14s. 2d., instead of £67 12s. 6d., That is, more than double. I say again to the House that the impact of such increases upon people with standing commitments which cannot be easily avoided or even cut down is considerable, and before further taxation is imposed, as some now advocate, I suggest that it is right and just that adequate time should be given.
None the less, I think I can fairly claim that at no time have I disguised the magnitude of the problem that confronts us and the large gap that has to be filled by taxation and savings. We should, however, remember that the Budget deficit, the excess of expenditure over revenue, which is in the region of £2,200,000,000 is fortunately not the measure of what I may call the potentially inflationary gap, that is to say, the gap that must be bridged by taxation or new savings, if demand is not to outstrip production. The House will doubtless remember that this gap, as distinct from the Budget deficit, is reduced by a number of different factors which I enumerated in some detail in my Budget speech. It is, of course, difficult to estimate the quantitative importance of these factors, as ways of relieving our immediate financial situation, but each of them is important and when allowance is made for their aggregate effect, the gap that still remains, and which it is important to cover by taxation and new savings, has been materially reduced.
I would call the attention of the House to another important matter of a different character. It is, as my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) knows, a time-honoured practice, from which Chancellors of the Exchequer do not depart, to budget for the revenue and expenditure of a year which ends on 31st March. It is the case also that new taxes do not produce the full year's yield, within the limits of the year so ended, and in particular the Income Tax assessment lags practically a year beind the income which is assessed. Therefore, the full effect of

the growth of income, taking place this year, particularly in the field of wages and salaries, will not show itself in Income Tax until next year. Though I have had to set my figures in the framework of a year ending on 31st March next, another view can be obtained by looking at the produce of taxation over the 12 months from now. It is true that I may have to count on a much higher rate of expenditure, but I can count on a much higher rate of revenue. In such a period the new taxes that I have proposed, and also the new taxes of the April Budget will produce something in the region of £400,000,000. Having said that, I wish to repeat—and I do not wish to suggest anything else—that it remains imperative on us to continue to make great efforts in the way of bearing new burdens, in making genuine savings, and in strict curtailment of all avoidable expenditure.
Having spoken of taxation, I would emphasise again the vital importance of all sections of the community saving to the utmost and devoting those savings to the State. I think I can say this afternoon that the campaign for savings, generally, is going well, though of course we must always do better. In the first 36 weeks over £313,000,000 has gone into Certificates, Defence Bonds and increased Savings Banks deposits. Adding, in that period, £300,000,000 of War Loan, £132,000,000 of National War Bonds and £13,000,000 of loans free of interest, we have reached a total of £758,000,000 or £21,000,000 a week since the opening of the campaign in November last.
I would like to say a word in particular about the National War Bonds. Subscription for these bonds opened on 25th June, and up to 30th July, as I have said, £132,000,000 has been subscribed. While these figures are much better than the figures for the early months of a similar campaign in 1917, when taxation was much lower than it is to-day and when a much bigger yield was given, it is clear that we must, as we are doing,
intensify our efforts. Sir Robert Kindersley, who has done so much in connection with our Savings effort, is specially devoting himself and his organisation to this object.
I have dealt with the salient features in the financial picture and particularly with the contributions to be made from taxation and from savings, but there is,


I agree, a wider aspect of the problem before us, upon which I should like to say something. In the useful discussions which have recently taken place in Parliament and the Press it has been emphasised, I think rightly, that any financial measure which we may take to deal with our problems can by no means be sufficient in themselves, but must be augmented by other means and particularly by the planned reorganisation of our productive resources. In other words, our war-time economic problems and particularly the mobilisation of industry for the war effort, cannot be solved by purely financial means. The organisation of industry for war purposes is obviously a substantial and a complex task. A large number of Departments are actively engaged in it and there has been as we all know a marked speeding-up of production. Criticism has been made on the ground that this has been accomplished, to a large extent, by the wasteful method of working very long hours rather than by drawing additional labour into the war industries. It is true that in the critical situation which arose after the collapse of France, the policy of working very long hours was deliberately adopted as the most effective, and indeed the only practical means of securing that immediate speeding-up of production which was so essential. But it was only a temporary makeshift, which cannot be perpetuated if we wish, as we do, to maintain production at a high level.

Mr. Gordon Macdonald: It is still going on.

Sir K. Wood: For example, the hours in building are not in future, save in very exceptional cases, to exceed 60 per week. The hours of women and children in future are, unless special permission is obtained, to be confined within the limits of the Factories Acts. For munition workers generally there are to be, as far as practicable, periods of reasonable rest. This will not only relieve the strain falling on those who are engaged in war work, but will go hand-in-hand with the absorption of additional numbers of work-people into armament production. By this means also, both the toil and the rewards will be more widely and equitably shared.
There is another branch of policy to which I would refer. A great deal has

already been done by the Board of Trade to restrict unnecessary production for the home civilian market. Many Orders have been made limiting the amount of goods—covering already a wide range—that can be supplied to retailers by manufacturers and wholesalers. The object of these restrictions is twofold—first, to help the diversion of our productive resources to war purposes, and second, to maintain, as far as possible, our production for export. Controlled goods, other than textiles, are already restricted to two-thirds, calculated by value, of the normal supplies, and as regards textiles too, there are severe restrictions. Another restriction prompted by the same consideration is that which prohibits, except under licence, the supply of certain machinery for the home market.
At the same time let us not forget that we are doing a great deal to prevent the prices of essential food-stuffs from rising, with the object of keeping down the cost of the minimum needs of life. Indeed, a far from negligible item in the expenditure which has to be defrayed is the cost of subsidising certain important articles of food—bread and flour, home-produced meat, bacon and the scheme for supplying cheap or free milk to nursing and expectant mothers and to school-children. These subsidies cost about £60,000,000 per annum.
Thus it can rightly be claimed that we have here an economic policy which will continue to be evolved and extended to meet changing circumstances and changing needs. To sum it up, it discourages forms of expenditure which though they be far from luxury expenditure, lend themselves to retrenchment without undue hardship, and, at the same time, it prevents the prices of essential food-stuffs from rising, with the object of keeping down the cost of the minimum needs of life. It is, I suggest, along those lines, in addition to taxation and saving, that we can best succeed in averting the danger which it is essential to avert, of an inflationary rise of wages and prices. In concluding my observations in this connection, I would say that, of course, by none of these means can finality be reached in time of war. But the action which we are taking, and shall continue to take, should do much to meet those who rightly say that our war-time problems cannot be solved by purely financial means


At this stage, it is only necessary for me to refer to two or three provisions in the Finance Bill itself. The proposal for deducting tax from salaries and wages has been generally welcomed, not only as an Income Tax reform, but by those who speak on behalf of the employés, as a real easement in the payment of the taxation now imposed. I have to thank my hon. Friends in all parts of the House for the suggestions which they have made in relation to this matter. To these, I need hardly say, we shall give careful consideration. With the co-operation of employers and employés, which I have no doubt will be given, I am confident that this new scheme will work successfully and to the advantage of both the taxpayer and the tax-gatherer.
I would just say a few words about the Purchase Tax. The House will find in the terms of the Bill the substantial changes that I undertook to make in the original proposals. In place of the flat rate of tax originally contemplated there are two rates of tax, sharply differentiated. Another important alteration is that those two rates can no longer be changed by Treasury Order followed by confirmation of this House, but alteration must be made by substantive legislation. Again, the original Purchase Tax Bill proceeded on the principle of exempting certain goods and making all other goods taxable, except when they were bought by a registered manufacturer or registered wholesale merchant for the purpose of his business. Under this Bill, we have placed in the Seventh Schedule the list of taxable goods and those goods only are taxable. What is not shown in the Schedule is not taxable in any circumstances. We have also made considerable simplification in the machinery. Under the original Bill, all goods except those exempt in the Fourth Schedule would have been subject to tax and it would have been necessary to register all manufacturers and wholesale traders, whether they dealt in taxable goods or not. Under the present proposals, registration is confined to manufacturers and wholesalers who manufacture or trade in taxable goods.

Mr. Riley: Are we to understand that goods in the taxable column of the Schedule will be taxable

if purchased by a manufacturer for the purpose of his business?

Sir K. Wood: I do not think that the matter can be stated as simply as that. I will give the hon. Member a reply later in our proceedings. In the Seventh Schedule will be found a statement of the goods which are taxable. The detailed proposals contained in the Schedule conform to the description which I gave in my Budget speech. Goods subject to charge at the full rate are either luxury goods or those which, in the hard circumstances of the war, we can do without or of which we can postpone the replacement. No tax confined to pure luxury goods could possibly produce the amount of revenue required, or could reduce civil consumption to the extent required. The Schedule of goods at the much lower rate of duty was described fully in my Budget speech, and relates to goods the replacement of which cannot be so readily postponed.
I realise that this is not a time when the House would desire me to examine the Schedule in detail, but there is one thing I would say. I have already made a substantial sacrifice of revenue, as compared with the original Bill, in applying the reduced rate to the big block of civilian expenditure represented by clothing and certain classes of household expenditure. I have no doubt that arguments can be and will be produced in favour of special treatment of other items in the Schedule, but I must remind the House that I am attempting, in this part of my financial proposals, to collect a substantial revenue and to contract civilian expenditure over a wide field. The Schedule will fail in these purposes if it becomes a honeycomb of exemptions. It must be considered as a whole, and as a balance between the needs of the financial policy I have mentioned and the desire not to make the tax press unduly upon households with limited resources?
Under Clause 19 (2) lists will be issued defining more precisely goods coming within the general classes in the Schedule, and the lists will be laid before Parliament, as is provided in that Clause. The tax will be chargeable on the wholesale value of goods, being the price at which the goods can be purchased in the open market from the registered seller. The registered seller will have to show the


amount of the tax separately on the invoice. The tax will be applied to all deliveries of taxable goods made by a registered seller to an unregistered buyer after the date when the tax comes into operation, whether the contract was made before that date or not, and I expect to bring the tax into operation in some two months time. I would particularly mention one case, because I have been asked to do so. Where manufacturers sell direct to retail customers, without going through the usual channel of wholesaler and retailer, tax will be chargeable on the notional wholesale value which will be determined by reference to the prices of similar goods which are sold through wholesalers to retailers.
I would finally call attention again, because it is important that I should do so, to Clause 37 which is designed to prevent gross forestalling. If the Commissioners are satisfied that a registered seller has sold to an unregistered buyer or transferred to the unregistered retail side of his business, after 2nd July, goods out of all proportion to the amount that the normal trade relationships would have justified for that period, they can declare such part of the sale or transfer, made before the coming into operation of the tax, as they think proper, to have been made after the tax comes into operation. This power will not be used where there is a legitimate expansion of business, for instance, in a munitions area now busily engaged in munitions, but the power will be fully used where there is real evidence that opportunity has been taken of the interval before the tax has been brought into operation to move goods in large quantities in order to avoid the tax.
I have described the more important of the Clauses in Part V of the Finance Bill, which deals with the Purchase Tax. Any explanation which may he required of the remaining Clauses can, no doubt, with the permission of the House, be postponed till the Committee stage of the Bill is reached. Nor would I, at this stage, propose to say more about the other Clauses of the Bill which, on this occasion, contains no general provision for the Amendment of Law, but is confined to matters arising out of the specific Budget Resolutions. I have deliberately devoted my remarks almost entirely to matters of general interest, partly because

that is customary on the occasion of the Second Reading of the Finance Bill, and partly because I felt that it would be particularly the wish of the House at this time when the impact of the war upon the financial and economic situation is of vital importance and concern to each one of us. I have endeavoured to show that the problem before us extends far beyond the realm of finance, in its narrow and technical sense, and that the policy of the Government for dealing with the situation must be regarded as a whole. The financial aspect represents only one side of the many-sided action which is being taken.
I have also tried to show that the financial weapon is playing its part and that, within the sphere of taxation and of savings, we have achieved much that is creditable in the period of less than a year which has elapsed since the beginning of the war. At the same time, I have not disguised my view that more will be required if our financial strength and resources are to be deployed to the maximum advantage. That strength and those resources must be used to the utmost and it is the aim and intention of the Government to see that that is done in the way which is wisest and most in accord with the national interest. I have no shadow of doubt that our financial and economic problems, however great they may be, can be surmounted and that, however heavy may be the burdens that are being and will have to be shouldered, they will be borne because they are essential contributions to the victory which we are determined to attain.

4.28 p.m.

Mr. Pethick-Lawrence: I am glad that the Chancellor of the Exchequer allowed himself a fairly wide latitude in the informative and interesting speech to which we have just listened. We have already had opportunities of considering the Budget in detail, and before the Finance Bill leaves us to go to another place we shall have several further opportunities of considering it. I propose to follow the example of the right hon. Gentleman, and to address my remarks to the Budget, in its setting in war finance as a whole. I can afford, not being in an official position, to allow my imagination a little wider play than was possible to a Chancellor


of the Exchequer, speaking ex cathedra from that Box to-day.
I am aware that the primary interest and concern of the country are the prosecution of the war. That matter must occupy their minds and almost their exclusive attention. I am aware also that it is the economic rather than the financial aspect which is of supreme importance. If the economics of the war can be adjusted to the transition from peace to war, it ought not to be difficult, and certainly not impossible, to make the financial consideration fit in with the economic facts. Therefore, we shall look forward with even greater interest to the Debate which is to take place to-morrow on the Motion of the Minister Without Portfolio, who will unfold to us the economic plans of the Government with regard to the prosecution of the war. Nevertheless, however that may be, no one could possibly say that the finance of the country in war-time is not of supreme importance. It may be true that a country whose finance is conducted with reasonable efficiency will get through the war somehow, but it will get through the war very much better if its finance is conducted on the best lines; and still more when the war is over the problem that will be left to posterity will be far easier of solution if right finance is adopted than if we muddle through the finance as we are inclined to muddle through in so many other aspects of life.
In the last war we made nearly every conceivable mistake that it was possible to make except to have so bad a finance that it actually lost the war. The war was conducted with gross extravagance. During the latter part of the war and certainly after the war was over, we allowed the rate of interest on borrowed money to go up and up until at one time it exceeded 6 per cent. We permitted a huge inflation, and not only did we have inflation but we had inflation of a most expensive kind. By that I mean that if you are to have inflation, you should have it by the direct creation of money or credit through the machinery by which money or credit is created. Instead of that, we camouflaged the inflation by pretending that we were getting loans from the public when they were really loans from the banks floated at the rate which the public were given in return for

their loans and, therefore, at enormous expense. The country certainly paid twice over, and I am inclined to say in some respects three times over, for the expenditure of the war. Finally, when the war was over we entered upon a period of ruinous deflation which had all sorts of disastrous consequences from which we were suffering right up to the outbreak of the present war.
I am glad to say—and I believe I shall carry the whole House with me in this—that we have done a great deal better than that in the present struggle, but that is not to say that we should not do still better than we are doing, with great advantage to the conduct of the war and with still greater advantage to the situation that will follow when the war is over. I propose to go into that in a little more detail towards the latter end of what I have to say. Before I come to that, I want to take a glance at the facts, to see what they are already and to make a certain number of conjectures as to what they are likely to be for the remainder of the war. Of course, I must make certain assumptions in so doing, because naturally all our financial prospects are conditioned by what happens in the war itself. But there is no harm in our making those conjectures and assumptions, because it is necessary, in order to conduct finance to-day as it should be conducted, to take some estimate of what is likely to be the finance of the future.
I shall take as my first assumption that which the Government from the beginning have laid down with regard to the Nvar, namely, that it lasts for three years and that victory comes to us in the autumn of 1942. Of course, if the war ends earlier than that, so much the better, not only in all other respects but for finance. If it should go on longer than three years—I say it with the strong conviction that every other hon. Member agrees that this country is prepared to go on with it until this menace of Hitlerism is destroyed—so much the worse for our financial situation, but it will still be one with which it is not impossible to deal. I will assume, what must generally be regarded as correct, that the expenditure of the State will continue to increase right up to the conclusion of the war, which, on the three years basis, will be at the end of September, 1942, and, of course, we cannot


expect very much contraction for the remainder of that financial year, that is, up to the end of March, 1943. The first part year of the war ended March last is already complete; the second year is nearly half-way through, and for the years that follow we shall have to depend upon our imagination and conjecture as to what is likely to happen. I am going to deal with this in very broad figures, because they are much more easily understood. I shall speak in milliards, that is to say, £1,000,000,000.
Broadly speaking, the total expenditure of the State in the first year ended in April last was two milliards of pounds, and we borrowed approximately three-quarters of a milliard. This year it is generally taken as probably true that the probable expenditure of the nation will be 3½ milliards, and of that the Chancellor of the Exchequer is raising by taxes about £1,360,000,000 in the current year. Broadly speaking, we shall have to borrow something like 2¼ milliards in order to foot the bill. The hon. Member for Wrexham (Mr. Richards) put a poser during the speech which he made on the Budget, and asked how it was possible for us to find 3½ milliards out of a total national income of five milliards. The position is this: The income of the country as a whole was probably between five and six milliards before the war broke out, and although a good many people have suffered a loss of income, many others have had a great increase, and a large number of additional people have been brought into the economic machinery of the country. The total national income of the country as a whole is considerably in excess of six milliards to-day, and is probably more like seven milliards. What we are doing at the present time is having to devote half the total income of the country to the prosecution of the war. We therefore have to convert this expenditure of the country, so far as half the national income is concerned, to the prosecution of the war.
I have now reached the end of what may be something like a reasonable estimate, and I now come to conjecture. I think that a minimum conjecture for the expenditure of the State in the year following this one, that is, the year 1941–42, is that we must certainly add on another half milliard, bringing it up to four milliards, on the assumption that no serious inflation takes place. In the year after,

we must add another milliard and expect something like five milliards for the total expenditure of the State for the year 1942–43. But if we were to pursue the path along which we travelled during the last war and were subject to inflation and more inflation and cumulative inflation, I am afraid that those figures would be very much higher still. I do not think that in the third year of the war we shall escape under 5½ milliards and in the next year much under 7½ milliards. Those are enormous figures, which seem utterly beyond our imagination at the present time, but it must be remembered that the whole price level would have changed on that assumption.
Let us see what the result of that would be. On the assumption that we put up the taxation revenue in the next year from 1¼ to 1½ milliards, the borrowing next year, on the assumption that we avoid inflation, would be something in the neighbourhood of 2½ milliards, and, if we did not avoid it, as much as four milliards. In the year following, borrowing would be about 3½ milliards on the assumption that we avoid inflation, and something like six milliards if we failed to do so. Adding up all the borrowings for the three years of war and the months that would follow until March, 1943, I reach this colossal figure: Borrowing, on the assumption that we avoid inflation, might well be in the neighbourhood of nine milliards, and on the assumption that we go into inflation it might be as much as 13 milliards. During the last war we increased the National Debt by something like seven milliards—between six and seven, at any rate—and it stood at well over seven milliards at the beginning of the present war. If we add the debts which we may expect to incur during the war to the pre-existing Debt, we get in one case a figure of 16 milliards and in the case of inflation about 20 milliards. That is not all, because I think by one method of finance we shall be borrowing those vast sums at a higher rate than the other. If the true method of finance is followed, if we bring down the general rate of interest to 2½ per cent., and if that be applied to the 16 milliards of Debt, we shall have a Debt charge of something like £400,000,000 annually.

Mr. Stokes: Might I interrupt the right hon. Gentleman? With regard to the figure of £400,000,000 which the right hon. Gentleman said would be


paid in interest annually, could he tell the House what he reckons the annual genuine savings of the people to be?

Mr. Pethick-Lawrence: I do not think that that question arises at this particular moment; in any case, I am coming to that very point, and perhaps my hon. Friend will have the patience to wait a little. This is a complicated argument; it is a very important question to look at these figures as a whole, and if my hon. Friend will have a little patience, I will come to the point that he mentioned.

Mr. Stokes: I was trying to help, not hinder.

Mr. Pethick-Lawrence: If, on the other hand, the full figure of 3 per cent. is charged and the total debt comes to 20 milliards, we shall be spending on the Debt charge something in the neighbourhood of £600,000,000. It may seem that £400,000,000 and £600,000,000 are such astronomical figures that it does not make much difference, but I venture to suggest that there is a very great deal of difference; £600,000,000 will be a further £200,000,000, and I would remind the House that £200,000,000 corresponds to 3s. in the Income Tax or alternatively nearly the whole figure which the Chancellor of the Exchequer is putting on the present Budget, including 1s. on the Income Tax and the Purchase Tax.
What are we going to do to stop the larger figure from being the one that actually comes into operation? I have pointed out that during the last war the first defect was extravagance. I think there is much less extravagance in this war. But as chairman of the Public Accounts Committee, I cannot say that there has been none at all. Our report, recently issued, calls attention to a good many extravagances which are still going on; and in some cases large firms and companies, which have a very great amount of power, are able to extract a good deal more from the national Exchequer than would be the case if they were humbler people. I believe that the Select Committee on National Expenditure have had the same experience. There are a good many loopholes which could be stopped up with advantage. Let us not be niggling in prosecuting the war;

but wasteful methods do not make for successful prosecution of the war.
In the second place, there is the question of the rate of interest, As I have said, we have done very much better in this war than in the last. We have kept the rate of interest for long-term loans at 3 per cent. That is a very great achievement. But the Chancellor of the Exchequer must have been surprised at the very large number of people who are willing to lend money free of interest altogether. The figures are very striking. I think that there is nothing to prevent a still further reduction of the rate of interest for long-term loans say to 2½ per cent. I believe that the Chancellor has the power to bring that about, and the public of this country, who in this totalitarian war will put everything into the scale in order to win, will not hesitate to support him if it is essential that it should be done. I suggest that if he cannot get the rate down to 2½ per cent. at once, he might get it to 2¾ per cent. The reduction of middle-term rates from 2½ per cent. to 2 per cent. is another possibility that the Chancellor should aim at. I shall have a word to say about the short-term rate later on.
It must be clear to the House that the economic problem is a fundamental one. At least half, and possibly more, of the economic productivity of the country must be converted from a peace to a war footing, whatever burden the Chancellor of the Exchequer imposes on the country. It can be done only in one of three ways—by taxation, by genuine loans, or by inflation. If it is not done by taxation or by genuine loans, inflation will come in automatically, and will enforce reduced consumption on the people of this country. The Chancellor of the Exchequer has imposed considerable additional burdens, but I am on the side of those who think that he could have imposed even heavier burdens in taxation. I admit that, even had he imposed additional burdens, he, quite clearly, would not have been able to finance the whole of the war by taxation alone. A large amount must be found by genuine loans if inflation is to be avoided.
It is difficult to ascertain precisely what the genuine loans run to at the present time. The Chancellor of the Exchequer gave a figure which indicated that over the whole period of the war something


over £20,000,000 a week was being subscribed, but I am sure that he would not say that the whole of that was necessarily genuine saving. I rather think that the figure included the reinvestment of the conversion of the 4½ per cent. Loan. I may be wrong on that point. I am doubtful, however, whether the genuine saving would amount to £20,000,000 a week. But the amount is increasing, and there is no real necessity for anything but genuine saving to fill the gap, if the public of this country is willing to have it so. I was glad that the Chancellor of the Exchequer referred to Sir Robert Kindersley, who has done wonderful work. His savings groups have been extraordinarily efficient. I have seen a great deal of their work, and I can say that the country owes them an enormous debt of gratitude. I wish them all success. It is the duty of all others to assist them in their work. My hon. Friend the Member for Ipswich (Mr. Stokes) must realise that every pound that the Government spends goes into somebody's pocket. If there is increased Government spending there is an increased opportunity for saving. You cannot say that, because the amount saved now is only £x per week, it will be only £x per week six months hence. It may increase very considerably during that time. We depend on that.

Mr. Stokes: That surely depends on whether taxation goes up or not, and whether prices remain level or not.

Mr. Pethick-Lawrence: I think my hon. Friend is putting the cart before the horse. If the voluntary savings are sufficient, together with taxation, prices will not go up; but if they are insufficient, inflation is bound to occur, and people will have their consumption cut down—in a very much worse way, because it will be indeterminate and regressive.
I come to the next point, with regard to the inflation of the last war. I pointed out that in the last war not only did we have very serious inflation, but inflation of the most expensive kind. We are to a great extent, I hope, resisting the temptation to finance this war by inflation at all. Further, in so far as the Chancellor is getting money from bank loans he is going to the banks direct, by means of Treasury bills and this new procedure which he has adopted. That is much better. But I still protest that 1 per cent.

is much too high a rate of interest. I know the Treasury's attitude. They take the view that the banks render a great deal of service, and that, in view of all that has happened to the banks since the war broke out, it is not unreasonable that the rate of Treasury bills should be higher than it was before the war.
But we must remember two things. The first is that not only has the rate of interest gone up from a little over half per cent. to a little more than one per cent., but the total number of bills is much increased. Last July it was in the neighbourhood of £1,000,000,000, and this July it was £1,725,000,000. That is an increase of £725,000,000, on all of which they make this profit; and they do not have to do a very great amount of work—though I admit they do some—in order to earn that additional profit. The time has come when this rate of interest should be cut. It would not be at all unreasonable for the banks at the same time to cut their rate for customers' deposits, which is now standing at half per cent. If the Chancellor of the Exchequer cannot get the Treasury bill rate reduced from one per cent. to half per cent., let him make a bite at the cherry, and cut it down to three-quarters per cent. Surely he has the power to do it, and the time has come when it would be perfectly reasonable to do so. That would save the State a considerable amount of money. Those are the suggestions that I have to offer for what should be done during the war.
I ask, finally, What will be the position after the war is over? When we come to that, we have this very troublesome fact to remember. We had not been balancing our Budgets for several years before the war broke out. In April, 1939, when the war was still only a possibility, or shall we say a probability?—it was still a peace Budget—there was a deficit of no less than £300,000,000 in the Estimates for the year. We have to add to that, any additional deficit which is likely to arise out of the war. When in a time of normal finance the cost of the additional debt incurred during the war, amounting perhaps to £300,000,000 or £400,000,000, is added to the deficit before the war, that will bring the total up to £600,000,000 or
£700,000,000. That does not take into account the vast expansion of services, which cannot be brought back to normal figures in a few months, or even in a few


years. Anyone who hopes that as soon as the war is over we shall go back to the halcyon days of Income Tax at only 5s. 6d., and of what we now consider low taxation on beer, tobacco and the other things, is living in a fool's paradise. But this is the essential fact. It has to be remembered that after the last war the physical wealth of this country was not materially less than it was before the war broke out. The same thing will be true after this war, apart from enemy destruction, the extent of which we cannot at present foresee. Therefore, just as it is the business of this Parliament, sitting now, to try to conduct the war finances to the best object, to prosecute the war, and to retain the living standard of the country, so it will be the business of the Parliament that is sitting when the war is over to clear up the mess of war, to clear up the gross injustices of our pre-war system, and to see that the whole resources of the country, unhampered by the financial strains imposed by war debts, are used to promote a healthy, happy, full life for every member of the community.

5.0 p.m.

Sir John Wardlaw-Milne: I have been much interested, as I am sure has the whole House, in listening to the speech of the right hon. Gentleman, and I am glad to hear that he is so optimistic as to the future, from the financial as well as other points of view, if the war continues for another two or three years. He suggested that if the war continued for that period, the probabilities are that although our expenditure would have been very largely increased, so also would the national income. He gave a figure, as our possible income at the end of another two years, of something like £7,000,000,000. The only comment that I have to make about that is that, although the whole matter is, as he suggested, purely one of conjecture, and therefore it is not fair to criticise or even to appear to criticise it seriously—and nobody can foretell in the least what may happen—I am a little doubtful whether, if the war did continue for that period, our income would increase in the ratio to which the right hon. Gentleman referred, although I have no doubt that some increase would accrue. It has to be borne in mind that although,

as he said, there are a great many people who will be earning more money as a result of the war, there are also many people in this country who will be earning less as a result of the war, and to some extent the one must be set against the other.
However, my object in rising to-day was not—if the right hon. Gentleman will forgive me—to follow his very interesting, but conjectural remarks regarding the future, but to deal with the proposals which the Finance Bill sets out before the House to-day. These proposals, although I am not qualified by mere inspection to say so, fully carry out I have no doubt the proposals of my right hon. Friend the Chancellor of the Exchequer. It is not in the wording of the Bill that I am interested; it is in the Budget proposals themselves. Again, I would like to bring before the House the total inadequacy of these proposals in dealing with the finance of the war at the present time. The expenditure of the Government is in the neighbourhood, according to my right hon. Friend himself, of £8,000,000 to £9,000,000 a day, and this must rise still further, so that we have a gap, according to the correctness of the estimates he gave as to loans and other methods of raising money, of something like £2,000,000 to £3,000,000 a day which cannot be covered either by revenue or by loans or in any other method so far put before the House by my right hon. Friend. It is a figure of a little over £800,000,000 a year. No ordinary budgetary methods to which this country is accustomed can possibly cover that sum.
Inflation under the present proposals of my right hon. Friend is inevitable. In fact, I would go further and say that inflation has already begun. It is not only a question—and here I slightly differ from the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) of our taking action to avoid the possibility of a future inflation; inflation is in existence in this country now, and it will increase. It is bound to do so under the present proposals. I do not know that any suggestion that anybody can put forward will entirely prevent inflation. I think it was a remark—I hope that I am fathering it on the right source—of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George)—at one time that you could not


win a war without it. If it was not his particular remark I apologise in advance, but certainly it was made in this House and it is a remark very difficult to controvert. Inflation is possibly inevitable, but we can do a good deal to try and prevent inflation from getting out of control. I have heard it asked more than once in this House what inflation is. It is said to be impossible to define it. I may be unduly confident, but I hope that I am not unduly bold if, at any rate, I try to define it. Inflation results from a steady increase of purchasing power, competing for a static or even decreasing volume of commodities in regular supply. I hope that that is not either too involved or too complicated. The system, in fact, works as a perfect balance. As the supply of goods decreases they become more valuable, prices rise and more money has to be paid to secure them. In other words, the value of money falls. If the process proceeds far enough more token money is required week by week to buy the same supplies until, as was seen in Germany and other countries, even a barrow load of paper money will not buy the simplest necessities. It is very easy for us in this House and for people outside to believe that anything of this kind is quite impossible in this country, but are we at all certain of that? The process may begin very gently indeed, and it may be out of hand almost before we know that it has begun.
To avoid inflation, or even to control it, certain actions must be taken, and to me at any rate they stand out clearly. We must in fact endeavour to reverse the inflation process, that is, to bring about a reduction of purchasing power or an increase in supplies, or better still, both. To name the remedy is quite simple; to apply it, in war particularly, is a much more difficult matter. May I ask the House to assume for a moment that my figure of deficit of £800,000,000 odd is correct. I would make it clear that I refer to the deficit between what we can raise and borrow, as set out by the Chancellor of the Exchequer, and the probable total expenditure of this financial year. If that figure of £800,000,000 is even approximately correct—and it may be considerably more before we are at the end of this financial year—most of this money will be dispersed by Government agency. The first point, therefore, clearly, is that which was so ably made by the right hon. Gentleman the Member for

East Edinburgh, and that is, how far is all this expenditure necessary. In other words, are the Government getting full value for every penny they spend?
The right hon. Gentleman spoke of his knowledge of this subject as Chairman of the Public Accounts Committee which gives him a special position from which to examine these matters. I can only say that seven months as Chairman of the Select Committee on National War Expenditure has not convinced me that there are no leakages or that the Government are getting full value for all their expenditure. At the same time let us be honest and fair in these matters. War expenditure on our present basis is something that is so new and so vast that it is impossible to believe that every scheme can be perfectly carried through and thoroughly examined. It is, however, clear that the first consideration in dealing with the possibility of avoiding inflation is the possibility of reduction in expenditure by getting full value for everything spent. The Government spend the money partly, or perhaps mainly, by payments to contractors for works, supplies and munitions of all kinds. This money largely goes in wages and in some cases results in largely increased earnings, particularly in the form of payments for overtime and night and Sunday work. Everyone realises that such conditions are for a brief period inevitable in times of stress such as we have had to go through in the past few weeks, but I have already, on a previous occasion, spoken of the danger both to the health of the worker and to the output of munitions of a continuance of this process, and also—and this is a very important point—of the possible social unrest from the inequality of wages earned by people doing practically the same work.
I would also like to refer in that connection to another matter which is perhaps not sufficiently realised, and that is, the effect of the knowledge of these conditions upon the fighting Services. I am not sure that Members in all parts of the House realise the effect that it must have upon men getting small Service pay when they know that considerably increased wages are being earned by those who were previously their neighbours. I do not want to emphaise this too much, but there is just another aspect that there can be no harm in stating publicly—there is also the


effect of the men brought from overseas who in some cases are doing heavy work on the pay of a soldier alongside men earning many pounds a week for doing work which is not nearly so hard or arduous.
Increased spending power will not come from the rentier class. Their available surplus is being steadily reduced. In many cases it has probably gone altogether. It will come, and it will come rightly, from those who earn more as the result of the war effort, and in reason this must not be too much cut down, but it must to some extent be controlled. In other words, those who are earning extra in this way must pay taxes. There is a great deal to be said for the proposal set out by a correspondent in the "Times" a week or two ago and which was earlier put before the House by my hon. Friend the Member for Lowestoft (Mr Loftus) for a universal tax on all earned income over a life-preserving minimum, the tax to be deducted at the source and combined with a system of voluntary allowances, and collected, of course, as it is earned.

Mr. Gordon Macdonald: Is it suggested that we should abolish indirect taxation at the same time?

Sir J. Wardlaw-Milne: Oh, no, every section of the community pays indirect taxation. Indirect taxation is not in question. All these things are arguable, but I think there is a great deal to be said for a direct tax on earned incomes collected at the source over and above—a minimum standard, and combined, as I say, with a system of family allowances. This proposal, is one which deserves earnest consideration. The tax on unearned incomes is already very high, and it will probably have to go higher as the war proceeds. So much for controlling and diminishing purchasing power.
There is the other aspect of the problem—the standardisation of prices. This means either an increase in supplies or their rationalisation to avoid an undue demand. An increase in supplies is probably impossible in war, and a great deal has already been done in regard to rationalisation. But further control of consumption will certainly be necessary. It is inevitable that the luxury trades must suffer, and unnecessary expenditure of all kinds, especially on luxuries

must be made practically impossible. It is true that the luxuries of yesterday become the necessities of to-day, and none of us would wish that it should be otherwise, and it may be very difficult for the Government to draw the line and hard for us to accept it. But our course is perfectly clear—consumption must be brought down. Lending to the Government—and I was very interested in the figures which the right hon. Gentleman gave us just before he sat down regarding loans—is admirable, and his references in this respect to those who lend and to those who put the necessity for lending so strongly before us. I very warmly support, but lending alone will not fill the gap: and fill it we must.
I am not sure of the accuracy of the figures I have seen quoted, but the latest statement I think is of something like £150,000,000 in subscriptions to National War Bondsan excellent result. Suppose this goes on and, with the sale of Savings Certificates, raises £500,000,000 or £600,000,000 in this financial year. If we add to this the Chancellor's hopes of reduced expenditure on renewals of plant and the very temporary expedient of using part of our accumulated Empire balances, we still have a gap of anything between £700,000,000 and £1,000,000,000. Our reserves in dollar and other securities will help, but we certainly cannot afford to see that one special asset which we hold disappear altogether at a very early stage of the war. Lending, therefore, through the system of loans which we know to-day will help but will not fill the gap. Is there to be a forced loan? Let us face the thing. Is that the next step? If so, the sooner the House of Commons considers that possibility the better. We are not living in ordinary times; we have to deal with conditions previously unknown in the history of this country. There are one or two expedients that, however, we might try before we come to the forced loan. Why not lottery bonds? I know all the objections which have been raised to this kind of issue, and although I sometimes doubt the validity of such objections in peace-time, they certainly ought not to apply in wartime. Some years ago—if the House will forgive me for quoting a personal matter—I put to the Lord President of the Council, then Chancellor of the Exchequer, a scheme for the issue of bonds


of a popular character on which no interest would be paid, but on which there was, each half-year, the prospect of very substantial prizes, paid out of the money saved by the fact that no interest was attached to the issue. I based the interest saving at that time at 2½ per cent., and Members who have not gone into the question would be surprised at the sum which would be available to provide the large number of prizes of varying value every half-year on these bonds. These bonds would have an enormous advantage over other issues of this kind because they are not really a lottery. There would be drawings for prizes half-yearly, and all one would lose, if one could call it a loss, would be the interest on each £1 or. 10s. held. I do not think anybody in this country would be seriously concerned at the possibility of a loss on a pound note especially when there was a chance of a prize every half-year. Objections have been raised that this country has never had to do anything of the kind, but when I was visiting one of our Colonies recently I spoke to the Members of the Southern Rhodesian Parliament and the public of Salisbury in the lottery hall. I am not sure whether that is the proper title, but it is a large place which was erected out of the profits of the State lottery. If it is not wrong for other parts of our Empire to conduct a lottery, I do not see why it should be wrong for ourselves, especially at the present time.
We are throwing out of work large numbers of people, and this process must be accelerated under any proposals which deal with the war effort. These people must be absorbed in essential industry as far as possible so that production can be increased, costs reduced and the expenditure on otherwise maintaining them, saved. I would like to know from the Government what are their plans on a really comprehensive basis to deal with this problem. We hear a great deal about the necessity for having more people in munitions activities, but we do not hear nearly so much of the large number of people who, as a result of the war, are out of work and cannot be employed in any industry of which they have knowledge and experience. There may be a considerable number in training, but I do not know what schemes the Government have in view, and I do not think

the House has been sufficiently told of their plans. I said at the time the Budget was introduced that the Excess Profits Tax of 100 per cent. was a mistake, and I want to repeat that I still think that was a mistake. By reducing it slightly we would get better returns and avoid destroying enterprise and initiative. Whatever the rate, however, it is inevitable that the taxation and restriction which are necessary in war must reduce private enterprise. The Government are, rightly, responsible, and therefore it is only to them that we must look for action to remedy the present position and absorb the people who have been displaced.
Another immediate matter is a survey of non-essential industry. Many factories are being hampered and many have closed down owing to restrictions and want of supplies. A shortage of raw materials is inevitable in time of war, but in some cases Government Departments are holding up supplies against a possible future shortage that is never likely to occur. In addition, therefore, to a definite plan by training for the absorption of those displaced, the Government should promote the continuance of such industries as cater for non-war and non-luxury productions so far as that is possible under war conditions. There is a wide field for the kind of survey I suggest, particularly in connection with the export trade. I ask my right hon. Friend, as soon as he has the present Finance Bill out of the way—and I look upon it, as he does, as an interim Measure—to devote himself to the consideration of some of the courses I have suggested.
If I may shortly repeat them, they are a system of taxation, universal in its application to all earned income above a stated minimum, and deducted at the source, with special attention to those who have benefited in the way of increased earnings as a result of the war; the issue of some form of premium bonds; a reduction of the Excess Profits Tax from 100 per cent. to 90 per cent.; further restrictions, if necessary, particularly on real luxury consumption; a survey of the existing non-war and yet non-luxury industries and an examination of their restrictions and difficulties; and, lastly, extended training, with other measures, for the incorporation of those unemployed. Unless we take action the necessities of the Treasury will force the Government to go to the Bank of England


for Ways and Means advances, and this will result in the further creation of credit with a large increase in Treasury bills. Inflation has already begun; it is not dangerous yet, but it may soon be so if the problem is not dealt with at once. Our estimated expenditure is £3,500,000,000, to be set against an estimated revenue, after all that the Chancellor has been able to do so far, of £1,360,000,000. The two previous Budgets have produced increased revenue amounting to £400,000,000 against a gap of £2,000,000,000. This is simply nibbling at the problem and shutting our eyes to the dangers ahead.

5.26 p.m.

Mr. Owen Evans: I am sure the House will have gathered, from the speeches to which we have just listened, that it takes greater note of the wider problem that faces the country than of an immediate revision of my right hon. Friend's Budget. The speeches of my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) and the hon. Gentleman who has just sat down show quite clearly that there is considerable misgiving in the minds of everybody who has given thought to this question as to the future policy the Government should adopt, if they have any definite policy at all. I do not suppose that any Budget has faced less opposition than this—there has been no real opposition to any of the detailed proposals—but, on the other hand, I do not remember any Budget which has had so many uncomplimentary things said of it. One has only to read the criticisms in the weekly and daily Press to see what the country is thinking about the Budget. It has been said that it is an interim Budget, a provisional Budget and a humdrum Budget, and one writer went so far as to say that the Chancellor's failure to face realities may be due to lack of imagination. I would not dare to go further than that and suggest that it may be due to moral cowardice, but at any rate it does seem to be the fact that the House is not satisfied with this Budget. Something more, and that pretty quickly, is needed.
The hon. Gentleman the Member for Kidderminster (Sir J. Wardlaw-Milne) suggested that the Chancellor is only just beginning and that immediately he leaves this Bill he must take no holiday but must devote himself at once to the wider

problems. My right hon. Friend the Member for East Edinburgh faced this wider problem in a most interesting speech, although I very much hesitate to follow him into the realm of figures such as milliards. If he will forgive my saying so, I prefer to use the usual term in common practice in this country and instead of saying six thousand milliards, to say £6,000,000,000—

Mr. Pethick-Lawrence: Six milliards is £6,000,000,000.

Mr. Evans: The right hon. Gentleman made three points which I think are extremely important. One particularly was emphasised. He said that one of the things we must do is to see that the Government avoid waste. He is Chairman of the Select Committee on National Expenditure. It is extremely difficult to watch expenditure in time of war. Fantastic increases in staffs in London, where you have thousands of members of a staff, growing rapidly, in great confusion, with no real control or organisation, is a fact as it exists to-day in some of our new Government Departments. It reminds one of what was said of the Duke of York, who had 10,00 men and marched them up a hill and marched them down again. That is taking place to-day in Government Departments. Thousands of officials are going out of London, and thousands of them are coming back again. Large buildings have been commandeered in London, to the great inconvenience of people who are doing very important national work, half of them still empty and continuing to be empty. That is a subject which the Select Committee might very well look into. I heard an instance the other day of a large floor with a rental of £1,000 or £1,500 a year. It was empty, but I understand that the lease was still in the name of a Government Department. The man in charge of it told me that there had been nine evacuations in that lease during the last year, Government officials coming in and Government officials going out. While the House desires that all the money that is needed is to be spent for the sake of prosecuting the war to a successful conclusion, I think it will agree that we must have full value for the money that is being spent.
The right hon. Gentleman the Chancellor of the Exchequer, in looking at the


wider problem, said that reorganisation is needed. It is clear to us all that he himself realises what the problem is, but the House would like to know what steps are being taken in the matter now. What organisation is taking place in order that no production other than for absolute necessities and for war purposes is going on? He said that long hours have now been done away with. In the building trade the maximum hours were to be 60, and we were to return to the provisions of the Factory Acts with regard to women and children. We are all glad to know that, because the experience of those engaged in the management of industry is that the long hours that have been worked during the last few weeks meant rather a loss of production than an increase. What is really wanted is to bring those people who are unemployed now into employment for national purposes. In the last return of unemployment the figures have actually gone up by about 60,000. That obviously would not be so to-day if there was proper co-ordination, and I hope the House will be able to hear something on that before very long.
I should like to ask some questions with regard to one or two of the proposals in the Bill itself. I thoroughly agree with the provision by which Income Tax is to be levied from wages at the source. I think that is an excellent piece of machinery which will be helpful to wage and salary earners, and it is a matter which those engaged in management for a long time have felt to be highly desirable. I have always believed in direct as against indirect taxation. I should like to have all indirect taxation abolished, because nothing tends more to cramp industry, business and trade.

Mr. McCorquodale: Would the hon. Member wipe away all taxation on beer, spirits, tobacco and the like?

Mr. Evans: There are well-known established commodities for which indirect taxation has been adopted, but there is a wide sphere from which it might well be removed. For that reason I welcome this proposal, which to my mind is one of the most interesting features of the Budget. The Purchase Tax has also been accepted by the House in general. The late Chancellor promised that an attempt would be made in the Bill to

meet the position of export traders. There are provisions in the Bill attempting to meet it, but I would point out this grave difficulty, in view of the encouragement which has been, is being and should be given as far as possible to the export trade. Let me give an illustration. The tax is 33⅓ per cent. on the wholesale value; therefore the price to the retailer would be 133⅓ per cent. As I understand the position, in exporting the commodity in question to the United States, Canada or Australia—I take those countries because I have looked up their Customs Regulations—the duty there would be levied on the 133⅓ and not on the 100. That is a very clear indication that, unless something is being done, the tax will have a tendency to hamper the export trade. I am sorry to say that I have not been able to find a way of avoiding it, but I should like to ask whether the Government are in contact with these Governments in order to enable them to agree that the import duty will be placed on the value of the goods and not on the value plus the tax imposed upon them. It is an extremely difficult problem, but it will have a material effect upon the export trade of the country to our Dominions and the United States. I should very much like the Chancellor to say something about that.
The only other point of detail to which I wish to refer is the application of the Excess Profits Tax to mining. I do not quarrel at all with the tax generally, but the base metal mining industry has largely departed from this country. Supposing that a British base metal mining company has made £100,000 excess profit, that profit can only have been made in one of three ways—by increased prices, by a decrease in costs, or by an increase in output. The prices of commodities have been very effectively controlled. The Government have done their work far better than during the Last war in regard to the control of prices of essential commodities. That being so, if a mining company registered in England makes excess profits, it will not be due to that cause, because the average price that it receives will not be greatly in excess of the pre-war price. Therefore, it must be a reduction in costs or an increase in output, and in most cases the increased profits of these mining companies are due to increased output. The result of that,


in my submission, is that the whole of the profit comes out of a wasting asset, and there is in effect a confiscation of a capital asset which is wasting yearly. I think this is an extremely important question for the Chancellor to consider in relation to its effect upon the mining industry as it now exists in this country, and I hope that some consideration will be given to that aspect of the problem. Let me conclude by saying that I am wholeheartedly in favour of the proposals in the Budget, and I trust that the Chancellor will listen to the voice of the House and that the Government will pay attention to the very much wider and bigger problem than the mere proposals in the Budget which we have to face.

5.46 p.m.

Mr. Douglas: The magnitude of the problem which faces the Chancellor of the Exchequer and the House is measured by the fact that national expenditure is now estimated at something like two-thirds of the pre-war national income, and even with the most optimistic estimate of the increase of income due to more people being in employment, longer hours, and so on, this must mean that we are spending upon national purposes something like one-half of the income of the people of this country. The amount of taxation which it is proposed to levy, even when the full benefit of the increases in taxation which have been imposed in the present and the previous Budget are taken into account, is less than well under one-half of the national expenditure. That is not a satisfactory state of affairs. Attention has already been drawn to the danger of inflation which we are running at the present moment. The floating debt is already some £1,600,000,000 or £1,700,000,000. The note issue has increased by £100,000,000 over the average for last year. Both of those things point in the direction of inflation, and some part of the increase in prices which has taken place is also evidence of inflation.
If we lived in a community in which the incomes of every member of the population were equal, there would be no problem, because we could then take one-half of the income of every individual and use it for the purposes of financing national expenditure, and the problem would be solved. The real difficulty

which the Chancellor has to face is the fact that we live in a community in which incomes are extremely unequal, and therefore, it is impossible to take half the incomes of a very large number of the population because their incomes are barely sufficient to provide for their necessary expenditure; and conversely, a very much larger proportion must be taken from the incomes of those who are on the higher levels of income. The reason the Chancellor of the Exchequer still has so large a gap between expenditure and income is that, on the one hand, there is the inevitable resistance, which every hon. Member, no matter to what party he belongs, must recognise to be justified, of those who are most poorly off to any further increase in the burden of taxation which they have to bear, and, on the other hand, there is the resistance of those who are better off to parting with a sufficient portion of their revenue to enable the Chancellor to balance his Budget. Evidence of the difficulty in which the Chancellor finds himself because of those two things is to be found in the fact that the present and the previous Budget have provided for increases in taxation which in a full year will bring in £367,000,000, and of that the increase in Income Tax and Estate Duties amounts to £162,000,000, whereas the increases in Customs and Excise, the Purchase Tax, and the increase in Post Office charges amount to £204,000,000. Consequently, a very considerably larger sum is being raised by the additional indirect taxes than is being raised by the increase in direct taxation, by Income Tax and Estate Duties.
That is a subject which calls for drastic alteration. It is extremely unfair. There is not a single person who does not realise that these increases in indirect taxation fall with greater severity on those who are least well off, and the most objectionable feature of all is the Purchase Tax, which is estimated to bring in no less than £110,000,000 in a full year. Undoubtedly the Purchase Tax has very large exemptions of purchases of necessary commodities, but in its nature it is a tax of an indirect character which is bound to fall most severely upon those who are unable to avoid making necessary expenditure. I do not think that anybody, on reading the classes of goods contained in the Schedule to the Bill, can


say that many of these things are not of a necessary character. It is said that this tax is desirable in order to discourage people from spending so that they may have more money to invest in war loans. But any form of taxation which will take an equal amount of money out of the pockets of the people of this country will produce that effect; any kind of taxation which will raise £110,000,000 will diminish consumption to the extent of £110,000,000; and it is not necessary that that object should be attained by means of the Purchase Tax. I say again that it is the most unfair method by which the object can be attained. It is said that people can defer their purchases; that they can make clothes, furniture and so on last longer; that they can manage to economise to meet the burden of the tax. But that statement is in many cases incorrect. It is true that a person who is established, with a family, has his furniture and can make it do, but what about a young man who is marrying and has to furnish a house? Every one of the articles which he requires for that purpose is subject to the tax. Therefore, the tax is an unfair and indiscriminate one, which falls on some people and not on others.
Let me give another illustration of the unfairness with which the burden will fall. It is to be applied to a very wide range of articles which have to be purchased by the local authorities. They have to carry on their duties as hospital authorities, public assistance authorities, and so on, and to do so they have to purchase large numbers of articles which are contained in the Schedule to the Bill. The London County Council, of the Finance Committee of which I am chairman, have calculated that the effect of the Bill upon them will be to increase their expenditure to the extent of £500,000 a year. That additional expenditure will be thrown upon the ratepayers of London owing to the increase in the cost of the articles which the local authority have to purchase. I do not know what will be the effect on other metropolitan local authorities—the borough councils, the Metropolitan Water Board, the Metropolitan Police, and so on—but in the case of each one of those there will be increased costs which will be thrown upon the ratepayers of London. That increase, as everybody knows, is thrown upon them in a most unfair and unequal fashion,

falling most heavily upon the poor and least heavily upon the rich. So far as this tax effects an increase in costs of that kind, it will have a doubly regressive effect, doubly unfair to those least able to bear it. Although it may be that hon. Members are prepared, for the time being, to accept the Purchase Tax as a means of meeting some part of the national expenditure, I hope the House will never consent to make such a tax a permanent feature of our system of raising national revenue. We want to have more direct and less indirect taxation.
When the Chancellor of the Exchequer introduced his Budget, he went out of his way to explain that there were some alternative sources of taxation which he was not prepared to accept. One of them was the taxation of land values. I noticed that the Chancellor did not devote himself to arguing that question upon its merits, and I was not surprised at that, because I think the merits of the proposal are well established and no longer need to be argued. What the right hon. Gentleman did was to say that such a tax could not be introduced at the present time because it would require the setting up of machinery which it would take some time to put into working order. Even if that statement were true—and I do not accept it, because there is an abundance of experience from all over the world to show that this thing can be done speedily, economically, and well—this is not the only Budget which has to be introduced. Provision must be made for the future. We have to look ahead. The level of national expenditure, now at £3,500,000,000 a year, may next year be at a higher level if the war continues, and the year after it may be still higher. Therefore, the Chancellor is not entitled to shield himself behind a flimsy excuse of that kind. He ought to look ahead, and he ought to make preparations for raising national revenue in a way which will be just, which will not bear unduly upon the incomes of the poor, which will not hamper production, but which rather will tend to encourage industry.
Reference has been made to-day—and very properly, I think—to the circumstances which we shall have to face after the war, because our troubles will not then be ended. One of the problems with which we shall then have to deal, no doubt, will be the ques-


tion of putting into employment those who are taken off the production of munitions and implements of war, and the tax on land values, which the Chancellor has rejected, would be a valuable instrument in securing that the idle resources of this country were put into use in order that its idle people should be employed. I hope that question will yet be pressed to an issue, that the Purchase Tax will be repealed, and that better taxation will be placed in its stead.

6.0 p.m.

Mr. McCorquodale: I find myself privileged to follow such an able and skilful maiden speech as the one to which we have just listened by the hon. Member for North Battersea (Mr. Douglas). May I be allowed to congratulate him heartily and to express the hope that we shall often hear him contributing to the Debates in this House? I should also like to apologise to the hon. Member for Cardigan (Mr. Owen Evans), who has just left the Chamber. I was so interested in an announcement of his, coming from the orthodox Radical bench of this House, that he was in favour of the total abolition of a tax on alcohol and tobacco that I thought he should have a chance to recant before he flabbergasted the Nonconformist conscience of this country, which in the past has given such support to his party. I am glad, however, that he did recant.
I should now like to say a few words on the proposed Purchase Tax. I will not quarrel with the tax or the principle behind it, although it will very possibly deal a death blow to much of that very sick industry, namely, the printing industry, with which I am associated. However good in war-time such a tax may be, when we return to peace, as some time we must, the Purchase Tax will become the most vicious of all taxes. Directly peace returns we shall have to do all we possibly can and devote all our energy towards re-starting peace-time civilian industry and getting civilian peace-time employment supplying civilian needs. This tax is designed to restrict production of civil peace-time commodities. I, therefore, submit to the Chancellor of the Exchequer that he should brand this tax as a "war-time only" tax, to be repealed as soon as possible after the war is over; otherwise I fear it may make immeasurably harder

the formidable task, which lies before us when we have won the war, of winning the peace.

6.3 p.m.

Mr. G. Macdonald: Throughout this Debate it seems to have been agreed that this Finance Bill is intended to be an instrument to carry the war to a successful conclusion. Before any Finance Bill can do that, it must do at least three things. In the first place, it must provide sufficient expenditure for the supply of all the armaments we need and I am not quite satisfied that the expenditure provided for in this Bill will do that. I should not be so concerned were I satisfied that present expenditure was not being wasted. I shall make no reference to any special munitions factory, but I have detailed knowledge of a number of munitions factories, and I am convinced that there is a great deal of waste and extravagance going on in every one of them. There are hundreds of people in my division employed in different munitions factories, and many of them visit me every week-end and give me specific information which they can vouch for, and which they will give to anyone, provided their employment is safeguarded. They can give information of sheer waste in the factories in which they are employed. I am not prepared to support any Finance Bill which makes provision for money to be thrown away.
I have drawn the attention of different Ministers to the waste which is going on. In fairness to those Ministers, I should say that they are new Ministers, and that they have not had very much time, but that they are doing all they can to investigate the allegations I have made. I have agreed to submit to them specific instances of waste, vouched for by men who have seen it take place. I am sure that a few million pounds could be saved in various factories if the investigation which ought to take place did, in fact, take place. I have an undertaking, however, from different Ministers that such an investigation will take place, and I am looking forward to good results.
In the second place, if this Bill is to prosecute the war successfully, it must also deal with consumption. I was very impressed by the clear, concise and convincing speech of the hon. Member for Kidderminster (Sir J. Wardlaw-Milne). I


agree with him that in time of war consumption must be reduced, but I am afraid he was looking in the wrong direction for that reduced consumption. I quite agree that there are certain people working for wages who should and could reduce their consumption, especially in certain commodities. I believe that it would be in their own interests and in the national interest if they did so. We should reduce to a minimum the hazards which brave men have to face on the sea, and no man or woman is serving the interests of the country in spending a penny piece involving more work for those engaged in shipping. I should prefer a more rigorous form of rationing to try and reduce consumption. I do not think the present form of rationing is vigorous enough in some directions. From personal experience we know that well-placed people in this country seem to get out of the difficulties of rationing far better than those poorer sections of the community. It is surprising how money speaks and with what eloquence it does so in the sphere of rationing. The hon. Member for Leigh (Mr. Tinker) made reference to the fact that he had found people paying enormous prices for meals in the City. Perhaps they can afford it, but whether that is so or not, a man with substantial means ought not to be able spend such large amounts on food.
This Bill does something which, to my mind, is most objectionable. I find that more than half of the money required is coming from indirect taxation. There is something wrong about that. The hon. Member for Kidderminster referred to certain people employed in industry receiving substantial wages. I know that there are men to-day who are drawing twice as much as before the war, but they are working twice the number of hours. This morning on the train I met men going to a munitions factory. They had left their homes at about 20 minutes to eight and would not return until 10.30 p.m. When men are working like that they are entitled to decent pay, but they are working far too hard for them to keep fit, and they have told me that this cannot go on for seven days a week, because they will freak down. I agree that we need some equalisation. There is the case in my constituency of a family where two of the sons have been called up, and their next-door neighbours, the father, two sons and two daughters, are employed in munitions

factories. I do not say that any of these five have been overpaid, but there is something wrong with a war which places so heavy a burden on the nation when one family carries so great a share of it and the other so small a part of it. I know that we, on this side of the House, may mince our words, and may be afraid of what we may say, but I spent this weekend among the workers of my constituency and people who are drawing these wages. They say it is unfair that they should be so much better off than in pre-war days while other families are so much worse off because their boys have been called up. It would not be very easy to equalise the burden of taxation throughout the whole nation, but some attempt ought to be made. Such a plan should not be confined to the working sections of the population alone.
I was rather staggered by the inference drawn by the Chancellor of the Exchequer from the figures which he quoted. He told the House that it had better know that a man with an income of £5,820 a year had to pay one-half in taxation. But that leaves that man with £2,910. I fully realise and appreciate the argument that he may have certain commitments, but can we argue that there is any equality of distribution in taxation so long as that happens? Again he gave a case of a man receiving £800 who would pay as a result of this Bill and previous Acts, one-fifth of his income. But even that man is not too badly off compared with those workers, referred to many times in this House as receiving big wages. I agree that a working-class family may be entitled to be better off than before the war as a result of the tremendous effort being put forward to-day to save this country and I ask the Chancellor of the Exchequer in designing future Finance Bills, to bear in mind that there are people in the higher ranks who can afford to pay more than they are doing.
I accept the proposal of the hon. Member for Kidderminster that direct taxation should bring in the whole of the revenue required. I neither drink whisky nor smoke, and, speaking for myself, I do not think that taxation should be used by any Government to sober the nation. I do not look upon taxation as a means of cutting down drink, although my division know where I stand. Revenue should be obtained from direct


taxation. What is happening to-day? This Bill places the same burden on two different classes of families. First, there is the family which has lost two sons in the war, and then the family whose sons have been kept at home because they are working in reserved occupations. Each of those families bears the same indirect taxation from this Finance Bill. But is that fair? Should the same burden be imposed on the family which to-day has made so great a sacrifice, as on the other family gaining as a result of the war? Indirect taxation is a vicious method. This is an interim Bill, and I hope the Chancellor of the Exchequer will consider whether it is not possible to design taxation in such a way that the burden is increased according to strength to bear it. There is a tendency in all our financial legislation to continue these differences when the war is over. We are not going to continue these differences when the war is over. The Financial Secretary can be assured of that. The men who are fighting and devoting their lives to winning the war expect that they will be able to enjoy life after the war better than they did before. They are not fighting a war that will leave them where they were before. The miners are not fighting such a war, nor are the soldiers, sailors and airmen. They are fighting, first, to defeat Hitlerism, but they are fighting also for a better distribution of national wealth when the war is over. The adversity and suffering of war have taught every section of the nation that the wealth of the nation must be distributed in a more equitable way than it was before the war.
In going through the list of articles which will he affected by the Purchase Tax, I realise what it will mean to thousands of young couples who want to start furnishing a house. Every article they buy will be taxed. They will have to pay heavily to help meet the cost of the war, and I would ask the Chancellor to see that they are not called upon to bear more than their fair share. This Finance Bill does not contain the elements which ought to be in a Bill whose object is to provide for the nation's need in time of war, and I ask the Chancellor to keep in mind those who can afford to pay more than they are paying. Will anybody say that the limit of direct taxation has been reached? It has not. The Chancellor will

get his Bill, and he will also get the Purchase Tax, but not because we agree with it. Many of us would like to fight it, but we will let him have it this time. We only ask him to label it as a war tax for the war only.

6.18 p.m.

Mr. Craik Henderson: We have had an interesting series of speeches this afternoon, starting with the Chancellor's illuminating survey and followed by the speech, which we appreciated, of the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). We have had many other interesting speeches, and the remarkable thing about them all is that they have approached the subject quite dispassionately. Party feeling has only occasionally crept in, and on the whole the subject has been approached as a vital problem which closely affects our interests. I much appreciated the speech of the hon. Member for Ince (Mr. G. Macdonald), and I hope to refer to it later. May I ask the Chancellor whether it is not possible for future Finance Bills to be drafted in simpler phraseology? The phraseology of Government Bills has been getting progressively worse. We all admire the skill of the draftsmen, but such things as double negatives make it very difficult for the commercial community to follow many Government Bills.
The problem to which all speakers have referred is that we have to meet an expenditure of £3,500,000,000 and that by this Budget we are proposing to meet only 40 per cent. by taxation. The balance obviously must be met by savings in expenditure, or by loans, or by inflation. The Chancellor has been a good deal criticised from both sides because he has not gone far enough. I think that he has shown moral courage in refusing to go too far at this stage. I will show by figures later how already, by the two Budgets of this year relating to Income Tax sometimes as far back as 1939, an enormous burden is being placed on the taxpayer. The country must, therefore, be given time to face that burden and to effect economies before the greater additional burdens are placed on them. I think I shall be able to show that at the present moment there is, in effect, a capital levy being imposed.
I would like to say a word about economy. It is a subject to which not


enough attention is being paid. A pound saved is of vastly greater benefit to the country at this stage than a pound obtained by taxation or loan. I recognise the tremendous work which is being done by the Select Committee on War Expenditure, but I am convinced that great savings could yet be effected. They must be watched, and I would appeal to the Chancellor to consider whether he should not go to the length of appointing a committee to deal not only with war expenditure, but with all expenditure. One deals with this question with great reluctance, but we have the alternative of cutting down expenditure or taxation, and in these times we cannot afford to disregard any means of limiting the gap. The matter will sooner or later require to be faced, for expenditure which would be permissible in peace-time is not always justifiable in war-time.

Mr. Riley: Will the hon. Gentleman particularise what kind of expenditure he thinks is wasteful?

Mr. Henderson: That is a pertinent question. I could give a great many examples, but we all know the varieties of expenditure which we think could be cut down. If I had more time I could go into them more fully. There is a good deal of peace-time expenditure which might be cut down, and if one went Through various institutions one could finds a great many which might be safely cut down. One does not, of course, want it to be done unless it is necessary, but we must always bear in mind that the two alternatives are taxation and the cutting down of expenditure. I was delighted that my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) took his courage in his hands and put forward the proposal that we should consider lottery bonds. I have raised this question before, and I did not get a very sympathetic reply from the Chancellor. At this tame we cannot afford to be too orthodox. The type of thing I have in mind is a loan paying 2 per cent. or less interest, 1 per cent. of which would be available for prize distribution.

Mr. Craven-Ellis: How much does my hon. Friend anticipate that premium bonds would raise?

Mr. Henderson: They could be made to raise a very large sum. People in

munition works who have money in their hands would welcome an opportunity of investing in a scheme of this kind, and I hope the Chancellor will not close his ear entirely to this appeal. A good deal has been said about taxing the rich, and it has been stated that the limit of direct taxation has not yet been reached. I do not think it has been reached entirely, but it has been reached completely in the higher ranges. I would like the Chancellor to clear up one point. In his Budget speech he said:
It is not always understood that if one took the whole of all incomes in excess of £2,000 a year they would only produce in extra taxation some £70,000,000 per annum."—[OFFICIAL REPORT, 23rd July, 1940; col. 640, Vol. 363.]
Subsequently, on the Budget Resolutions, the hon. Member for Chesterfield (Mr. Benson) put that figure at £270,000,000, and the Chancellor did not dissent. I should like to know which figure is correct.

Mr. Benson: One was a calculation of the total amount of income left in the hands of Surtax payers after paying tax, and the other was a calculation of the amount if all Surtax payers had their incomes reduced to £2,000.

Mr. Henderson: I am obliged for the explanation. A point which is occasionally overlooked when we are dealing with Surtax is that the tax which has been proposed by the two Budgets this year is not in respect of this year at all. That is an important point which the House does not always appreciate. The Chancellor has raised the Surtax considerably in these two Budgets, but he is not raising it on the incomes of this year. He referred to Income Tax as being for the previous year, but Surtax is for incomes a year further back. Extraordinary results follow from that. A man whose income was £100,000 in 1939 would have believed he was liable to pay £67,000 in Income Tax and Surtax. By the first Budget this year that was raised to £80,000, and it has now been raised to £86,000. I would ask the House to remember that that is not in respect of this year at all. I will give an example. Assume that his income for the year up to April, 1940, was £100,000, that for this year it is £60,000, and that for next year it will be £60,000. That is a fair assumption, because, as hon. Members know, large investment incomes have


fallen. What happens? On 1st January, 1941, he will be called upon to pay Surtax of £45,000, not in respect of his income of this year but in respect of the £100,000 that was his income for 1939–40.

Mr. Kirkwood: Tell us how much he will have left?

Mr. Henderson: He will be £10,000 out. [Interruption.] Hon. Members may dispute my conclusions but I am stating facts. Next year he will pay £45,000 in Surtax and £25,000 in Income Tax, a total of £70,000, whereas his total income for that year will be £60,000. In addition, he will be liable for a further sum of Surtax in January of the following year in respect of the £60,000. These are facts, and though my hon. Friends may dispute the conclusions to be drawn from them, they show, I submit, that already a capital levy is being inflicted, because the demands can only be met by the ordinary large Income Tax payer by borrowing. If things go on and on in that way, the effects may be very serious.

Mr. Kirkwood: The hon. Member, being a Scot like the rest of us here, knows perfectly well that you "can't tak' the breeks off a Hielan'man."

Mr. Henderson: I think they are making a good attempt to do it, and to do something a little more.

Mr. MacLaren: Take the sporran too.

Mr. Henderson: I have given these figures to show that, in my view, there is no hope of obtaining any increased revenue from the higher incomes. That source is completely dried up. We are going beyond what the Income Tax payer can pay out of income, because he has to draw on capital to pay. I am not making a party speech, but am trying to put certain facts before the House.
We now come to the next point, which has been mentioned by several hon. Members opposite, and mentioned with great fairness, and that is that we know—because I have the figures here worked out on a most conservative basis—that in the case of people engaged in munitions work, engineering, shipbuilding and so on, they have had an average increase in wages running from 50 per cent. up. I agree that in a good many cases that is

due to the men working longer hours, and I appreciate that fact, but I am coming to the point of what margin of money they have. We have been talking about rich men and poor men. In my view, the only man who is rich to-day is the man who has a surplus of income over necessary expenditure. Hon. Members will recall Mr. Micawber's immortal remark—I hope I have it right—"Income, £20; expenditure, £20 0s. 6d.; result, misery. Income, £20; expenditure, £19 19s. 6d.; result, happiness. That is particularly true to-day. In the higher income ranges there is no margin between income and necessary expenditure. People have to cut down and cut down.
A great many workmen have not got increased wages, or only small increases of wages, but in many cases wages have considerably increased. What is the position there? Say that before the war a man had an income of £4 a week and that his income has been increased by 50 per cent. and to-day is £6. Say that before the war his expenditure was exactly the same as his income, £4. The increase in the cost of living, according to the "Board of Trade Journal," is 21 per cent. That means that his expenditure has risen to £4 16s. That man, without cutting down one penny of his expenditure on his standard of living as compared with pre-war, now has £1 4s. left in his pocket each week.

Mr. Sloan: Is he better off than the £100,000 a year man?

Mr. Henderson: He is a great deal better off. In ordinary times one would be glad that the man had this additional spending capacity, but in war-time it is a great danger. It must be realised that if we multiply that surplus of £64 a year by the number of workmen to whom my illustration will apply—and these are conservative figures, because in many cases wages have gone up to £10 or £12—it comes to a very large total. In some way or another that money ought not to be available to create inflation. It must not be used for increased consumption. I would remind hon. Members that at present a man with £6 a week and a wife and two children pays nothing in taxation. I say that the surplus in these cases must either be taxed or it must he lent to the country; there is no alternative if we are to deal successfully with the


financial problem. I should like to see the man who is working hard getting some credit, and I am surprised that my hon. Friends on the opposite side have come down so ruthlessly about loans, but the thing that has to be considered is that that margin must either be lent to the Government or it must be taxed, because, to my mind, there is no alternative.

6.38 p.m.

Mr. Benson: We have listened to a very ingenious speech by the hon. Member for North-East Leeds (Mr. Craik Henderson), in which he tried to prove that the man who now receives go a week is a good deal better off than a poor Surtax payer who has £150,000 a year and is paying £130,000 a year in taxation. I am afraid that we on this side of the House are not prepared to accept that point of view.

Mr. Craik Henderson: The hon. Member will realise that that was not my argument at all. My argument was that if a man whose income next year would be £60,000 had to pay away £70,000 he was in the worse position.

Mr. Benson: That may be true, but we know well that the normal course of a Surtax payer's income is not downwards. The hon. Member has only to look at the Inland Revenue returns to End that the incomes of Surtax payers go steadily upwards. I do not want to deal with the hon. Gentleman's speech, however, but with that of the Chancellor of the Exchequer. The right hon. Gentleman has been accused of various things this afternoon, from lack of imagination to moral courage—yes, he was actually accused of having displayed moral courage; but I think that what was definitely clear both in his speech to-day and in his earlier Budget speech was that he was greatly ashamed of that deficit of £2,100,000,000. If he is not ashamed of it, why does he try to explain it away? He said that it was an apparent deficit, but that there were other things to be considered—savings, the gold reserves that we are sending to America, and also what the Colonies are leaving here. He was careful not to give an estimate of what those items amount to, but he did try to minimise his deficit.
I am glad that the hon. Member for Kidderminster (Sir J. Wardlaw-Milne)

gave £800,000,000 as his estimate of the real gap which has not been filled up by any of these methods. It confirms my own estimate. We cannot send more than £300,000,000 of gold and securities to the United States year after year. That is the maximum that we dare part with and we cannot put genuine savings at more than £1,000,000,000 a year. The right hon. Gentleman puts savings at £22,000,000 a week, but we know perfectly well that that figure contains not only reinvestments but certain amounts of inflationary money, and also that as the figure covers only the first nine months of the war it includes a reat deal of prewar savings. The maximum savings that we can expect, on present prices, is no more than £1,000,000,000, and we shall be lucky to get that. I do not think we can put at more than £100,000,000 the amount which the Colonies are leaving with us. That gives us, roughly, £1,400,000,000 towards the £2, 100,000,000, leaving an approximate gap of some £700,000,000 this year, and next year it may be greater.
This year £700,000,000 will have to be met by inflationary borrowing; there is no other source from which it can come. In his Budget speech the right hon. Gentleman read us a little homily on inflation. As I listened, it struck me as being rather theoretical and abstract. I got the impression that he had said to his typist, "Just run off a couple of pages on inflation. You will find something about it in the ' Encyclopaedia Britannica'." It soon became clear that his little homily had not the slightest relation to his Budget proposals, and I began to wonder whether he understood his own homily. It was not until the Chancellor started defending his Budget proposals that it became obvious to me that he had not the faintest grasp of the subject. How has he defended this Budget? He says, first, that he has taken as much in taxation as is reasonable, and, secondly, that he must give people time to look round and to adjust their expenditure. He has failed to realise that an inflationary borrowing of £700,000,000 is just as direct a tax upon the community as if he had put it on in the form of Income Tax, or Surtax, or Death Duties, or Purchase Tax. Where does he think the £700,000,000 is to come from? Does he think that it will come from thin air?
Does he think that when he has arranged for £700,000,000 to be entered in the ledgers of the banks that he has got £700,000,000 worth of goods, because that is the problem? It is not a question of getting £700,000,000 in the bank ledgers, but of £700,000,000 worth of goods which are to be extracted from this year's consumption—and they are not to be extracted from next year's. You cannot "pass the buck" in that way. If we inflate this year, we impose a burden this year, and the sooner the Chancellor realises that fact the better. Does he think that the inflationary rise in prices which has already started will give people time to look round, and that that rise in prices will be a reasonable burden?
The Chancellor of the Exchequer has not yet grasped the fundamental fact that it is not he who imposes the burden on the community but the spending Departments. They decide the size of the burden. The only thing that the Chancellor of the Exchequer does is to distribute the burden upon given persons and articles. He does not fix the size; all he does is to decide who shall pay. He has decided this year that a burden of £700,000,000 shall be fixed, not according to any plan and not adjusted to any given preconceived ideas, but thrown upon the community blindly, haphazardly, and, what is still worse, regressively, because it will hit the poorest most hardly and the rich least hardly. I do not know which depressed me most, the inadequacy of the Budget or the arguments with which the Chancellor defended it.

Sir Irving Albery: I know that the hon. Gentleman cannot really be called upon to make alternative Budget proposals, but, in view of the argument which he has just put forward, it might be helpful if he could say just how he would raise the £700,000,000 by direct taxation.

Mr. Benson: I am not prepared to argue the details at this moment.

Sir I. Albery: It could not be done.

Mr. Benson: It could be done. It can be shown that our limits of taxation are by no means reached. I am aware that the Chancellor of the Exchequer has framed his present scheme out of kindli-

ness. He has been attempting to temper the wind, by refusing to shear the lamb, but it is not in his power to temper the wind. The lamb will be shorn, for certain, in one way or another. The right hon. Gentleman has done this out of the goodness of his heart, but, when I contemplate the right hon. Gentleman's Budget I am reminded very much of that cynical adage which says that the preoccupation of the wise is to avert the harm done by the good. The right hon. Gentleman does not realise that inflation inflicts a burden on the community. This year's burden is £3,500,000,000. No matter what the Chancellor does, that burden will remain at that figure. When he says that he has raised all that is reasonable by taxation there is only one explanation, and it is that he regards a tax framed according to a carefully conceived plan, as unreasonable and the throwing of £700,000,000 of burden, blindly and haphazardly upon the community as a reasonable method. As a matter of fact, I am not sure what the word "reasonable" means in connection with taxation. We are not concerned with reason in the midst of a war but with taxation which is adequate. There is no other criterion by which we can judge our Budgets or our Chancellors. Does anybody suggest that the present taxation is adequate? The Chancellor made great play with the fact that a man with a wife and two children and £400 a year now pays £15 16s. 8d. in tax and he said that, according to the last Budget, that man paid only £11.

Sir K. Wood: No, only £1.

Mr. Benson: I am referring to the last Budget. In 1939 that man was only paying £1 but what would he have been paying in 1915 and 1916, when we were also in the middle of war? No one will pretend that taxation was adequate in the last war. As a matter of fact, we know that one criticism of the finance of the last war was that taxation was imposed upon a hopelessly inadequate scale. The same man whom the Chancellor now proposes to tax £15 16s. 8d. would have paid £25 in 1915 and £31 10s., exactly double the Chancellor's present taxation, away back in 1916. What is the use of pretending that our taxation is reasonable when, at the £400 level, which is by no means near the poverty level, the taxation to-day is only half of what it was in 1916?

Mr. MacLaren: The cost of living was different.

Mr. Benson: The cost of living had gone up but does my hon. Friend think that by refusing to impose direct taxation, the cost of living will not still go up? It is not a question of whether we shall bear the burden. My hon. Friend is falling into the same trap as that into which the Chancellor has fallen. The question is not whether we shall but how we are to bear the burden and who is to bear it. I was asked by the hon. Member for Gravesend (Sir I. Albery) what I would do. I will tell him. I would raise direct taxation from the very lowest level to the very highest level. I would bear in mind that, as regards the Surtax payer at the highest level, you might have a very large individual surplus left and that you cannot get very much in bulk, and that you have to bring your taxation right down the scale. I would slash the personal allowances. It is the only possible way, seeing that our whole system of graduation of tax is based on personal allowances. I would adjust the burden which the Chancellor is throwing haphazardly on the community. And although I increased the tax I should not be increasing the burden on the community or on the lower range of incomes. I should be adjusting the burden so that the lower range of incomes bore a less burden than they will bear under the inflation which the Chancellor will not be able to prevent. Let us get to the actual facts. I want to make a comparison. It will be an inadequate one because the statistics themselves are inadequate, but I want to compare what happened in 1931 in regard to direct taxation with what is happening now. I have chosen that year as a basis, because that is the first year in which the exemption limit was approximately what it is to-day. As a matter of fact, the exemption limit is higher than it was in 1931, and therefore this comparison is the more effective. If we take the Income Tax and Surtax of 1931–32 and remember that in that year we had two Budgets—

Sir J. Wardlaw-Milne: After the second Budget?

Mr. Benson: Yes. The actual amount of income left to the Income Tax payer was £2,274,000,000. I do not know the figures for the present year, so let us take

those for 1938–39, which are the last figures published. I am taking them from what is known as the column of actual income in the Board of Inland Revenue's Return. If we take the income as shown there for 1938–39 and deduct from it this year's taxation—and I would remind the House the income is a great deal higher than it was—we get, not £2,470,000,000, but £2,820,000,000; in other words, direct taxation still leaves £350,000,000 more in the hands of the taxpayer than was left in 1931. And in that year we were not in the middle of one of the most desperate struggles we had ever had. What is the use of pretending? We are nowhere near the limits of taxation. If we are to raise £3,500,000,000 this year and if the spending Departments are to spend that amount, it is no use saying that we have reached the limits of taxation or of any given tax until the machinery of that tax has broken down. We are not lightening the burden, as I have said half-a-dozen times, by framing our Income Tax lightly, for we are not placing a burden upon the community in the Finance Bill but are distributing that burden. It is nonsense to pretend that our most effective, our most fair and most delicate tax, the Income Tax, is incapable of dealing with a great deal heavier burden than the Chancellor of the Exchequer is throwing upon us at the present time. It has done so in the past and must do so again. Some of my hon. Friends have been very worried about the Purchase Tax. I am not a bit concerned about that tax this year. It proposes to raise a mere £40,000,000. The inflation tax is to raise £700,000,000 by almost identical methods—by raising prices. The Purchase Tax is a flea-bite compared to the inflation tax.

Mr. Wedgwood: It is not selective.

Mr. Benson: The inflation tax is selective and, therefore, the balance is probably in favour of the Purchase Tax; but it is of course a silly and clumsy tax. What is to happen? Increased prices will lead to increased wages which in turn will lead to increased Estimates for next year. It is merely a muddleheaded attempt on the part of the Chancellor of the Exchequer to feed himself on his own tail.

Mr. MacLaren: There is not much of it.

Mr. Benson: There is no taxation at our disposal which can come anywhere near direct taxation for delicacy and power. The most tragic thing about the Finance Bill is the way the Chancellor is missing the boat. Ever since we had the change of Government and when we were faced with disaster on the Continent, the whole nation has girded up its loins, not merely in the munition works but as a nation of taxpayers. Everybody knows that the general feeling was that this Budget which has been dismissed as an interim Budget, was expected to impose swingeing taxation on the people, who were ready for it. I remember discussing this on the Saturday before we had the Budget. People were expecting really heavy taxation. They were expecting very heavy burdens to be placed upon them. They were expecting it, not with fear but with the realisation that it was the only sound method of financing the war. The country was ready for the taxation. What has happened? The Chancellor of the Exchequer has gone into labour and has produced this wretched mouse that we are discussing to-day, an increase of about £125,000,000, in face of an increase in the Estimates of over £800,000,000. The best comment of public opinion on the Chancellor's Budget is the fact that the day after it was announced there was an immediate jump in equity shares, which shows that even the conservative-minded Stock Exchange was expecting far heavier and more drastic taxation than we have had.
Frankly, this is the worst Budget of modern times. Sir John Simon budgeted for a deficiency of £1,400,000,000. The present Chancellor is proposing to budget for a deficit of £2,100,000,000. Sir John Simon raised 47 per cent. of his Estimates by taxation; the present Chancellor proposes to raise 39 per cent. As far as badness is concerned, the right hon. Gentleman surpasses Sir John Simon in every way. I want to give him a warning out of the friendliness of my heart. I want him to ponder on the fate of Sir John Simon and to realise that both his feet are on the slippery slope that leads to the House of Lords.

7.1 p.m.

Mr. Salt: We have listened to many interesting speeches, including those of the hon. Member for Chesterfield (Mr. Benson)

and the hon. Member for Ince (Mr. G. Macdonald). They made suggestions, and I wonder whether, if they were on the Front Bench they would have put forward those suggestions. The suggestion which was made in the last speech was that Income Tax should be charged from the highest to the lowest, but I think most of us would agree that as regards the smaller incomes there is a minimum that should be left free. The hon. Member for Ince made a speech much of which was admirable, bold and wise, but I wonder whether he would have made it if he was the Minister of Labour. During the last war, when those of us who were in the ranks of the Army were receiving about 4s. a week with a separation allowance, we remembered those at home getting high wages£8, £10, £12 and more a week—men whose brothers were in the Army and getting so little. We said that if ever there was another war, there must be conscription of the whole country, so as to avoid a repetition of those conditions. Unfortunately, things appear to be continuing in the same way. I hope that the Government will seriously consider some of the points brought out by the hon. Member for Ince and others so that we shall prevent a tremendous increase in wages and general expenditure.
In the few minutes in which I propose to engage the attention of the House I would like to refer to the Purchase Tax. In passing, I would say that I believe that if that tax were levied on the retail sales, it would prove the simplest and most satisfactory method and one which would be appreciated by the public more than the present suggestion. It would certainly avoid any trouble as regards export trade. I hope that the last word has not been said on that matter and that it will be reconsidered. I would like to point to one particular set of commodities which is mentioned in the seventh Schedule—drugs, medicines and surgical appliances. I do not know whether it is realised, but I am told, on excellent authority, that 97 per cent. of the surgical industry is taken up by working for the war and Government Departments, and when we realise that the hospitals and other charitable organisations use such a tremendous amount of the remainder, it is obvious that the machinery needed to make the alteration and to calculate the amount of the tax


will cost so much that it will destroy the value of the tax, almost if not quite in its entirety. I was pleased to hear at Question Time that spectacles are to be placed on the free list. It is stated in the Schedule that:
medical and surgical appliances and essential drugs, being appliances or drugs of an exceptionally costly character (including insulin …).
should be free. It leaves very much in doubt the question of what other commodities will be included. Most of the surgical appliances are needed for the results of industrial accidents, and the extra cost would come as a heavy toll on those who have already suffered in industrial life. There may be other commodities which could be left free in the Schedule, but I think it would be very difficult to assess the cost of all appliances which have to be manufactured specially—and they are the great majority—because a great deal of the cost is incurred in the fitting in addition to the manufacture. Until an appliance is completed no one can tell what alterations may be necessary. I think it would be well to leave those free and I hope that the Chancellor will decide to do so. There is one further matter which I would like to mention. In the free list the following are mentioned:
Appliances or drugs of an exceptionally costly character.
I do not think that one can easily assess what is costly, because it depends on the pocket of the person who is purchasing the article. Many people have to buy such things as belts and trusses, and it is well known in the trade that a man who works in an industry where the heat is great, must have an exceptionally costly appliance, otherwise it will not endure the heat. Matters of that kind which are technical make a great deal of difference, and therefore one cannot judge the exception merely by the cost of the appliance. I hope that this matter will be considered and that drugs and appliances which are almost entirely for use by the hospitals or the Government Departments will be put entirely on the free list.

7.9 p.m.

Mr. Leslie Boyce: Hon. Members in all parts of the House realise that, if finance Bills are an unpleasant necessity under normal peace-time conditions, they are bound to be infinitely

more unpleasant and necessary, and more frequent, when we are in the throes of the greatest war in history which is costing the nation between £9,000,000 and £10,000,000 a day. This staggering expenditure must be met somehow. But, in facing up to the new and increased burdens which the Chancellor now proposes to place upon us, we have that consolation which derives from a firm and rational conviction that they are all part of the price which we have to pay in order to achieve that victory which in the end will assuredly be ours.
In spite of what has been said this afternoon by the hon. Member for Chesterfield (Mr. Benson), borrowing must of necessity continue to play a large part in the raising of the money necessary to pay for the war; and in his broadcast appeal on Friday last, Sir Robert Kindersley urged industrial companies and their shareholders to invest in National War Bonds. It occurs to me that there is a very simple and effective way in which the Chancellor could supplement that appeal, and one which would give a great fillip to the War Savings campaign; and, consequently, to the national revenue. I suggest that he should announce that the Inland Revenue authorities would be willing to accept War Bonds for cancellation in payment of taxes, especially Excess Profits Tax, and of Death Duties. This would enable those companies which have the cash available to convert their reserves for taxation into War Bonds immediately. At the same time, it would release for war purposes considerable sums which are no doubt being held back against payment of Estate Duties, which in many cases probably will not fall due until long after the war. It should result in a large aggregate sum accruing to the Exchequer in the course of the war. Under such a dispensation, a continuous stream of Bonds would be issued at the one end, to take the place of those being cancelled at the other. I understand that something of the kind was eventually done in the last war, and would commend the suggestion to the early consideration of the right hon. Gentleman, who, when introducing his Budget, so forcibly impressed upon us that he was urgently in need of cash. I believe there is a large amount of cash ready to fall into his ample lap from these sources, if he will only say the word.
I should like to say a word about Clause 12, which provides, inter alia, that payment of premiums in respect of war risks insurance on industrial works, plant and machinery will be disallowed in computing the amount of profits for purposes of taxation. I have carefully studied the observations made by the Chancellor on this subject during the discussion on the Budget Resolutions. Nothing he then said could in any way alter the fact that it is wholly illogical, and, I suggest, unwise and unreasonable, that, on the one hand, the Government should make it compulsory for manufacturers to insure their stocks of raw materials against war risks under a Government scheme, while, on the other hand, they not only refuse to sponsor a compulsory scheme, but actively discourage any voluntary scheme to insure against war risks the very buildings, plant and machinery which are necessary to convert those raw materials into finished products.
The reasons for a compulsory scheme seem to operate even more forcibly in respect of industrial buildings, plant and machinery. Moreover, there is a growing demand for such a scheme, so that the manufacturer, who has the misfortune to have his works destroyed by hostile action, shall not have to discharge his workmen for the period of the war and go out of business himself. If some such compulsory scheme had been introduced at the beginning of the war, it would not only have engendered a sense of confidence and security among all those covered against war risks—which I suggest would be a very good thing in itself—but it would have resulted by now in the Exchequer, or the insurance companies, holding a very large sum with which to underwrite future losses. I hope that the Chancellor will review the position, in the light of more recent experience, and of the growing demand for such a scheme, to see whether present conditions do not warrant the extension of the principle of compulsory insurance to property, and especially to industrial works, plant and machinery.
I do not think that any British subject worthy of his citizenship would at this juncture wish to resist, or even adversely criticise, such taxation as may be necessary to pay for the war, even though it might take the whole of his income, and, if need be, the whole of his capital as well,

provided that he is sataisfied that the financial burden falls with reasonable equity on the community. From what we have already seen of the Excess Profits Tax in practice, there can be no question that it fails in this respect. What is the meaning of the term "Excess Profits Tax"? It is a tax on profits in excess of, what? Presumably the Government aimed at taxing very heavily, and, as I think, very rightly, profits arising out of the war? Their object, presumably, was to appropriate to the national Revenue a part, or the whole, of that amount of profit, which was in excess of what the profit would have been over the same accounting period, if there had been no such conditions.
To arrive at a standard by which this excess can be measured is very difficult; some might think it impossible. But it is equally difficult to find any justification for the purely arbitrary standard which has been chosen, and which has already proved itself grossly unfair in many cases. What possible connection can there be, which will generally apply, between the profits of the calendar years 1935, 1936 and 1937 and war profits made up to 31st March, 1939? It is obvious that a number of concerns are now legitimately and quite normally making large profits, and will continue to make them, from pre-war-contracts, entirely divorced from the war and preparations for war, and, in spite of the fact that the businesses concerned have been adversely affected by the war. Yet, almost all that profit must be paid to the Crown, simply because the three years selected were, by some fortuitous circumstances, lean years. In some cases within my own experience, they were lean years simply because the business happened at that time to be still battling through a particularly severe and prolonged depression, from which it eventually and completely recovered, but not until after 1937. Because it was down then, the Chancellor has decreed, in effect, that it shall go down again, and shall stay down for the duration, not of the war only but of the operation of E.P.T. In some cases within my own knowledge businesses had large and profitable orders on their books during 1937 but, nevertheless, had a lean calendar year then, because the period was one of preparation—of designing, ordering materials, enlarging shops,


installing additional plant, making jigs and tools and so forth—for dealing with those contracts, which proved profitable in the succeeding years. But simply because, in terms of profits, they were still down until after 1937, they are in effect told that they are to go down again, and to stay down for the duration of E.P.T.
On the other hand, a number of concerns which are to-day making large profits entirely out of war work are being allowed to keep their profits, because for them the years 1935, 1936 and 1937 happened to be fat years. In many cases they were fat years solely or mainly because they had the good fortune to secure Government contracts in the early stages of the rearmament programme. But, whatever the reason for their good fortune at that time, who is to say that had there been no war they would have continued to enjoy their fatness! Again, everyone knows that years of prosperity in one trade are often years of depression in another, and this frequently happens to concerns inside the same industry, owing merely to domestic arrangements, to the laying down of programmes or even to an alternating chance. One is therefore driven to the conclusion that the whole conception, or at all events the present conception, of the measurement of war profits is and must be capricious.
In the previous Debates on this tax, the House listened again and again to assurances given by the ex-Chancellor of the Exchequer, and by the Financial Secretary, that it was their desire and intention to deal equitably as between one concern and another. On the strength of these assurances, this House passed the second Finance Bill last autumn, which introduced the Excess Profits Tax. What has become of those assurances now? The tax has been increased to 100 per cent. and the last three lines of Section 13, Sub-section (7), of the second Finance Act, 1939, which gave discretion to the Board of Referees in dealing with exceptional cases, were deleted by the Finance Act earlier this year. Consequently, as the law now stands, and as it is still projeced by this Bill, those suffering the greatest hardship have been robbed of their only hope of equitable treatment. I suggest to the Chancellor of the Exchequer that it would have been far more equitable to levy an adequate general tax on all businesses

which were assessable to Income Tax under Class I, Schedule D, before calculating Income Tax; and to assess Income Tax as chargeable under all the Schedules on the remaining profits; thus abandoning all attempts, which in many cases have already proved futile, to measure war profits. Could anyone justly object to such a proposal?
What right has anyone to say, "I must retain my profits even if they may be 100 or 200 per cent, because I made as much in x years"? What right has anyone to avoid or escape taxation on that account? Yet, that is what is being done to-day. Or what justice is there in the Government imposing on the tax collector the duty of saying: "You must pay over to the Exchequer all except 6 per cent. on your capital because you made little or no profits in x years?" Really, it is a fantastic proposition as it now stands. In many instances there is obviously a far greater case for imposing the heaviest taxation on those who have continuously made profits, and therefore at least had the opportunity of building up their reserves, than on those who, after an unduly long depression or after a period of careful preparation happen to be making profits during the accounting period only.
Moreover, as every industrialist knows, there is, from the standpoint of the National Revenue, a still more serious objection to the tax of 100 per cent. Whether you are an employer or a workman, it is always the hope of reward, however small, that sweetens labour. Without that hope, no matter how lofty or widespread are the feelings of patriotism, so long as human nature remains what it is, I fear that the National Exchequer must suffer.

Mr. Ellis Smith: Not as far as the workers are concerned.

Mr. Boyce: I said, "Give the manufacturer and the tradesman, like the workman, something for which to work in addition to his idealism, instead of stifling all endeavour, as is being done at present, and the Revenue will assuredly gain in the process." Otherwise carelessness, extravagance and inefficiency will inevitably be the result, and habits will be formed from which recovery will be slow, costly and difficult when the war is over. I therefore appeal to the Chancellor of the Exchequer to re-examine afresh both


the principle and the incidence of the Excess Profits Tax, in the light of the experience which has now been gained, and of the representations made to him by hon. Members and myself.

7.26 p.m.

Mr. J. H. Hollins: I do not think that I need apologise for troubling this House. I do not trouble it very often, and I do not keep it very long. Probably that is due to a pearl of wisdom I once heard dropped from the B.B.C.—it is not very often that you get them—by a music-hall artist, who is also a philosopher. He said to his partner, "Mother, this world would be a much happier place to live in if only the people who have nothing to say would not say it." I believe that I have a word to say on the Budget, or at least to give a little advice to the Chancellor of the Exchequer when he proposes his next Budget next month. I cannot claim to be a financial expert, and I have discovered that I am not alone in this, but I would like to hear a little less of the equality of sacrifice and a little more of the practice of it. I heard one hon. Gentleman say that he was £10,000 out, but he did not tell us how much he was in. And I have heard complaints of people being swamped by taxation, and I am expected to shed tears for them. I cannot shed the tears. My sympathies are reserved for the men who present their bodies as a bulwark against the enemies of this country for 2s. a day.
The present method of financing the war cannot go on. It is financially unsound. The late Chancellor of the Exchequer, after eight months of war, said that we had added £2,000,000,000 to the National Debt. I have only to apply the principles of arithmetic to the war to know that when the war is over this nation may be in pawn, and the men, who, I hope, will come back after a victorious result, will be faced with the knowledge that they themselves, their children and their children's children will have to spend the whole of their time working in order to pay off 3 per cent. interest. Sir Robert Kindersley made an appeal on the wireless, and it was said that they were waiting for a rise in the rate of interest. You did not appeal for the men. You fetched them. Fetch the money. Science has produced modern and most expensive weapons of war, and

yet we are still financing this war on the basis of the days when the fighting men were armed with bows and arrows.
Quite frankly, we must look further. I have taken the trouble to get out some figures, which show that the estimated wealth of this country is £25,000,000,000. One-fourteenth of this sum is owned by one per cent. of the population, and £20,000,000,000 is owned by 10 per cent. of the population. All of this is not, I agree, liquid capital, but at least one twenty-fifth of it is reserves, and I suggest to the Chancellor that he should imitate his right hon. Friend the Prime Minister, who, when First Lord of the Admiralty, told the Navy to "Go and get them" when the enemy had 400 English prisoners on board the "Altmark." He should get this money. If men give their lives during the war, people who have money should lend it, and if the Chancellor and his advisers cannot conceive a scheme through which they can tap this source, then I believe the statement that the expert financiers in this country are either in gaol or on bail must be true.

7.32 p.m.

Sir Herbert Williams: We have just listened to an interesting speech, but, if I may say so with great respect, not a very informative speech.

Mr. Kirkwood: We shall get all the information from you.

Sir H. Williams: Take as an example the statement which the hon. Gentleman made that we can get all the money from the banks. I suppose the hon. Gentleman has seen so much money on deposit, but if he had taken the trouble to see the other side of the balance-sheet, he would have found that this has all been lent and that all you could get from the banks is through the process of inflation, which everybody has been denouncing. Therefore, I hope the hon. Gentleman will read a bank balance-sheet before he makes his next speech on this subject.
What strikes me about this Budget is the willingness with which people are accepting heavy new burdens. Many people have said that this Budget is not fierce enough, but I took the occasion last April of saying that I thought the taxes then imposed were about as much as could then be stood. What is important to realise is that you are suddenly im-


posing on people—it does not matter what class—sharp new burdens to which they have to adapt their lives. If you examine the domestic accounts of almost any family, they will show heavy commitments, such as a house being purchased on a hire-purchase system and the making of provision for old age by means of life insurance premiums. On these, people can effect no economies at all. There is this element of the time factor, which those who are appealing to the Chancellor are entirely overlooking. So far as normal people are concerned, these burdens bear heavily, but I have had only one letter of complaint—I leave out the Purchase Tax—which has come to me from precisely the type of man I have been trying to describe. He is the father of a large family, with heavy commitments, and he is really perturbed as to what further adjustments he can make, because the bulk of his income is already pledged.
What I am rather surprised about, however, is that nobody has asked whether we are getting value for all the money we are spending. Last April the then Chancellor forecast a £2,000,000,000 Vote of Credit, and the present Chancellor has raised that by £800,000,000. He has done that on the basis of expenditure out of the Vote of Credit during the four weeks ended 20th July which is £57,000,000. That is roughly £17,500,000 higher than that contemplated last April. Why are we spending £17,500,000 more than was contemplated as the average for the year? It is not, I imagine, because the total number of men in the Forces has increased beyond the extent anticipated; it is, I take it, because we are spending more on munitions. I must be a little careful in this field, because I happen to be one of the members of the Select Committee on National Expenditure and chairman of the Supply Sub-Committee, and I do not want to say things which have come to me in that capacity and on which reports have not yet been presented to the House. It is common knowledge that in recent weeks a large number of men have been paid seven days' pay for six days' work. This scandal and folly of Sunday work and excessive overtime, which I have denounced at every possible opportunity, was reported on by the Select Committee prior to the attack on Belgium and

Holland. Since then overtime has become much heavier and it is bad for the men. They are being paid much increased remuneration for a small increase in output. I am not blaming the men; naturally, if I could get double pay on Sundays I would take my day off on Wednesday, instead of Sunday, when the rate is normal. Vast sums have been poured out. I imagine that nearly £100,000,000 has been wasted in the last few months through this device of trying to get men to increase their output beyond their normal physical capacity.
On 10th May the Government decided to ask the people to ignore Whit Monday, and in a company with which I am connected this was the experience. The managing director called the men together, explained the circumstances and said that if they were paid time and a half, it would make no difference to the company because it was earning its standard rate and anything above was taken away by the Excess Profits Tax. Accordingly, if they were paid time and a half, it would be at the expense, not of the company, but of the State. Eighty-two per cent. of the men of the company volunteered to work on the Bank Holiday at the usual rates of pay, and by making that surrender of their normal rates they were making a gift, not to the employer, but to the State. But they reckoned without the Amalgamated Engineering Union, which demanded that time and a half should be paid. In that they had the support of the State Departments—

Mr. Kirkwood: How many men were involved?

Sir H. Williams: The firm employs about 300 men. Other firms did not necessarily ask their men to volunteer, as did the managing director of this firm, but everybody who worked that Bank Holiday was paid time and a half, so that the Amalgamated Engineering Union insisted on profiteering. It is just as well that this should be said, in spite of the many murmurings behind me from hon. Gentlemen who are members of the Amalgamated Engineering Union and who are quick to cry out, "Shame on others who are profiteering," but are inclined to wink the eye at anything done by their own members. [An HON. MEMBER: "It is not profiteering!"] I think it is profiteering. You are exacting money from the State without justification.

Mr. Kirkwood: On a point of Order. The Amalgamated Society of Engineers, of which I have been a member for 48 years, do not take advantage. No body of men have sacrificed more than this society.

Mr. Speaker: There is no question of a point of Order.

Sir H. Williams: I am fully aware of the normal arrangement that, if a man is called up to work on a Bank Holiday, he should get extra pay, but here was a case where a decent body of workmen belonging to the union thought it their duty to help the State when their brothers were fighting for their lives for 2s. a day and to make a sacrifice. They had that right of making a sacrifice taken away from them by the union. That is what I said, and it is the truth. It is just as well that those who cast aspersions at others should occasionally receive a little criticism themselves.
We have a Purchase Tax which will occupy a great deal of our time when we get into Committee. That is natural. We always criticise a new tax more than existing taxes. We are used to existing taxes. The new taxes introduce a great many difficult problems. I want to stake a claim out for consideration in Committee of one or two points. In Clause 19 the Treasury takes power to define articles with greater precision, because under the Schedule articles may be free of tax, they may be taxed one-sixth or one-third, and there will be questions of interpretation. Everyone will be uncertain at what rate a particular article is going to be taxed. The decision is to be made by the Treasury, subject to the control that we can pray against their decision. If the Treasury decide that an article which everyone thought was in the second column is to be put in the first column, you are increasing the tax from a sixth to a third, and I do not think a tax ought to be doubled without the House passing a Resolution approving the increase. I hope the Chancellor will be willing to consider an Amendment which my hon. Friends and I will table suggesting that it should be so altered that an affirmative Resolution of the House is wanted to give effect to an act of definition by the Treasury which in effect may increase the tax which will have to be borne. I regard the Purchase Tax,

though it may be a necessary expedient, as nevertheless bad in principle. A tax should be a certain tax. There should be no difficulty in ascertaining your liability. This tax is to be uncertain. I think it will give rise to very considerable difficulties of administration. What is worse, the consumer will not know how much is the tax upon an article that he is buying. If I buy an ounce of tobacco, I know how much it is taxed. If I buy a shirt, I have no means of finding out how much tax was paid when it was sold by the wholesaler to the retailer. I think the consumer in general ought to know what is the burden of the tax. He will not know.
In the Schedule we are certainly going to have difficulties, because naturally it is not easy to draw up this Schedule. I am certain there were many headaches in the Treasury before they came to a final conclusion, and I hope they will be open-minded, because people will find features in it to which they take exception, and already Members are receiving communications from all quarters putting forward this or that reason why a particular commodity should be in the Second Column or on the free list. I understand that many Members have had an opportunity to-day of hearing an eminent person explaining why there should be no tax on books. The Chancellor naturally wants to get as much money out of it as possible. His inclination, therefore, is to resist all proposals to take anything out, or to put anything into a lower classification. But let us take the very first item. Ordinary garments will pay a, tax of a sixth. On the other hand, the tissues from which those garments are made will pay a tax of a third. There has to be added on to the tissues the labour of manufacture. It seems to me a strange thing to tax a semi-manufactured article at double the rate at which you tax the manufactured article, and if you buy the tissues, as so many mothers do to make their children's clothing, the tissues will be taxed, and so the clothing made at home will be taxed, but if you buy the children's clothing at a shop, it will not be taxed at all. That is going to be rather difficult to sustain.
I hope the Prime Minister had nothing to do with the next paragraph, because hats are to be subject to an Excise Duty, and it will obviously be a serious burden


to him. There is one strange item. It is proposed to tax an article named "kapok." I was rather startled when I saw that and I went into the Library to consult what I was told is the finest dictionary of reference in the world, though it was obviously printed a long time ago. Kapok was defined as something used for stuffing pillows. That is not its present principal use. It is used for stuffing lifebelts. I really think that re-consideration should be given to a proposal to put a duty on lifebelts at a time like this when they are in greater need than ever before.
On page 44, there are some items which rather disturb me. I understand that the first column of the Schedule was regarded as for articles of a luxury character. It is proposed to have an Excise Duty—that is what a Purchase Tax is—on typewriters, dictaphones, calculating machines and other office machinery. It seems to me a very reactionary thing to propose what is regarded as a luxury tax on these articles, and it may bring in virtually no net revenue to the Exchequer. They are largely bought by Government Departments—at the moment very largely—and by firms engaged on war contracts of one kind or another which have had to expand their organisation—precisely the class of people who will be subject to the Excess Profits Tax at 100 per cent. When these are bought I understand that they are not regarded as capital expenditure. They will be a trading expense charged against revenue, and the only effect will be that the whole cost of this tax will come back on to the Treasury in a diminution of its receipts from Excess Profits Tax. The only effect will be that a great deal of labour will he undertaken in that direction. There is a number of other items, pens, pencils and the rest, which it seems to me rather absurd to bring into what is designed as a tax on luxuries. Pens and pencils are the tools of many people's trades, and to tax the tools of trade is unwise, and I hope there will be some reconsideration.
I want to get back to one other matter of importance in connection with the Purchase Tax. It is probably the most important item of all. At the moment we are very rightly doing all that we can to stimulate the export trade, and it is vital that we should do so, because unless we can maintain the export trade at the

highest possible level, clearly we shall have difficulties in financing necessary imports of raw materials and munitions from overseas. In many countries the tariff system is differently based from Ours. Those countries do not impose their duties upon the price at which the articles are being sold, but upon the price at which those articles are sold wholesale in the country of origin. The United States of America, in particular, maintains a very elaborate organisation for ascertaining what is the wholesale price in this country—and the same applies in the case of any other country—of goods shipped to the United States; and for their purpose, under the existing law, the wholesale price includes any internal tax levied upon the articles. Therefore, all the articles in the Schedule to this Bill of kinds which we may export to the United States will have their value, for the purpose of ad valorem duties when they enter the United States, raised by one-third or by one-sixth, as the case may be; and if my recollection serves me correctly. I think that, in addition, the United States have a system of anti-dumping duties whereby there may be a surtax imposed upon these articles. Of course, the extent to which this will operate harmfully will be the extent to which we are in the habit of exporting these goods to the United States or the extent to which we desire to increase our exports to the United States; but it seems to me that probably the gravest aspect of the Purchase Tax is that it may undermine our capacity to export successfully to the United States of America.
The Purchase Tax has two purposes. One is to raise money, and the other, clearly, is to cut down the consumption of goods to which the tax applies. In view of this, if the Purchase Tax becomes law, there will be a very strong case for doing away with the Limitation of Supplies Order which has been published by the Board of Trade. I opposed that Order on the last occasion on which I spoke at any length from this Box in the Debate on the export trade. On that occasion, I drew attention to what I regarded as the evil of the Limitation of Supplies Order. That evil was shown only too clearly this morning. I was horrified when I learned that unemployment has increased by some 60,000 as compared with a month ago, partly due


to the situation in the coal-mining industry, for which there is an explanation, but partly due to—and officially attributed to—the effect of the Limitation of Supplies Order. We are closing down production and throwing people on to the labour market at a time when the organisation for munitions manufacture is not sufficiently developed to absorb them. That seems to me to be foolish. We are spending money on these people in giving them unemployment benefits or unemployment assistance, and we are depriving their former employers of a great deal of their tax-paying capacity. I know of one company in whose case the whole of its liability to Excess Profits Tax has been wiped out by the Limitation of Supplies Order; it is only a small company, but the Treasury will receive several thousand pounds less than they would have received from that small company if this Order had not been made. When one sees an increase in one month of 60,000 in the number of those unemployed, and when one bears in mind that during the same month, according to statements made in the House, roughly 200,000 have been called to the Colours, it means that there are 250,000 fewer men in industrial production in this country. That is a very serious state of affairs. I know that the Minister of Labour explained the other day that he and three other fellows were the four greatest fellows who had ever been in any Government, and that everything was going to be splendid—

Mr. George Griffiths: From where did the hon. Gentleman get that?

Sir H. Williams: The Minister of Labour said it; he named the other three, and he was broadminded enough to include the Noble Lord the Minister of Aircraft Production. I hope that the Minister of Labour will apply his mind to this problem, which is depriving the Chancellor of revenue, and increasing his expenditure. I do not altogether judge Ministers by the rapidity with which they circumnavigate themselves. We see a great many people running round in circles and proclaiming to the whole world how well they are doing it. I think His Majesty's Ministers must apply their minds to the problem of unemployment far more than they have done and also to the problem of bringing into in-

dustry those hundreds of thousands of women who are only too anxious to come in the moment the door is opened. So far we have not been too successful. The revenue is being prejudiced, the costs of production are being increased, and expenditure is being increased. All of these are matters which I think are appropriate subjects of discussion on the Second Reading of the Finance Bill, and although my remarks have not been quite in line with those of other hon. Members who have spoken, I hope I have not wasted the time of the House by drawing attention to these matters.

7.56 p.m.

Mr. Woods: The hon. Member for South Croydon (Sir H. Williams) was very indignant about those workmen who are making their contribution to the war effort in the factories, whose work is vital to the prosecution of the war, and who, because of the machinery devised by the trade unions to prevent exploitation and long hours, received a day and a half's pay for a certain day, and, according to the hon. Member, are getting seven days' pay for six days' work. It amazes me that any hon. Member or any intelligent person should make a grievance of that when, at the same time, there are people who are getting fabulous annual incomes without doing a day's work. It seems to me to be a case of straining at a gnat and swallowing a camel. Millions of workers are fully alive to the fact that many parasites who contribute nothing receive fabulous incomes "beyond the dreams of avarice" of the average working-class family. It amazes me that anybody should complain because men doing honest, decent, and necessary work get the wages which it is only fitting should be paid.

Sir H. Williams: Does my hon. Friend think it is playing fair deliberately to work on Sunday and to stay away on Wednesday, so that on Sunday one gets twice as much pay as one would get on Wednesday?

Mr. Woods: My reply to the hon. Member is that where anybody deliberately does that sort of thing, he should be dealt with, and my experience of trade union machinery is that they soon put their foot down on that sort of thing. If the other people to whom I have referred were compelled to contribute to loans at 2½


per cent., I think there would probably be a much more efficient organisation and distribution of the wealth of this country. On this occasion, as on previous occasions, the Chancellor has referred to the astronomical figures of the Budget and the stupendous and unenviable task which he has, and I think we all appreciate that. When all is said and done, this Budget, which places additional and very grievous burdens on certain sections of the community, is only a drop in the bucket. When there are added to the figures of the Budget the contributions from Savings Certificates, bonds and loans, there still remains a very considerable gap to be filled. The problem of obtaining that additional sum must be faced and I suggest that the Chancellor might find a solution by relieving a burden of taxation which I think is unjust and inequitable.
I agree with the hon. Member for South Croydon that people who take a live and continuous interest in the prosecution of the war feel a grievance when public money is extravagantly wasted. Especially is this so when people see in their own districts works put up at considerable expense and then, because they do not comply in some slight respect, demolished and something slightly different erected. I believe that there has been experience of this kind of thing in Hull, where a local authority set up some construction which, because it did not comply in certain respects, was blown up. When people see this sort of extravagant waste of public money it does not incline them to a spirit of sacrifice.
The time has come when there should be organisation not only of man-power, but of the wealth of the country. We have interminable Debates and disagreements on the banking system and on frozen credits; a little heat might possibly make them liquid. The Debates get us nowhere, and all the time there is this vast potential capacity of wealth almost entirely unorganised. An indication of this can be seen in the increased unemployment figures which have just been announced. If we are to pay for this war out of current income, it is obvious that we cannot afford this vast number of people crying out for something useful to do, but doomed to be idle spectators. This potential capacity could be organised to produce increased wealth if the Government faced up to the problem.
The danger of the Budget is its innovations, and particularly the innovation of the Purchase Tax. It will only aggravate inequalities which already exist. The tax imposes burdens on specific individuals and families and takes no account of their commitments, responsibilities, the size of their families and so forth. It is utterly inequitable, and inevitably the repercussions will be on the Government. At this time, directly or indirectly, the Government are the largest employers of labour in the country. They cover all those in the Army and other war services, the auxiliary services, and provide allowances to old age pensioners, the unemployed and so on. Whether we agree with it or not, we are committed to a sliding scale for the fixing of wages, and this tax will increase the cost of living, bringing an automatic rise in wages to certain sections of the community. In the case of the old age pensioners, the Government legitimately will adjust their allowances, and so what the Government obtain on the one hand, they will have to give out on the other. Taxation of this kind seems to go round and round and get nowhere.
If this war is to be won, it will be won by the spirit of the people and the conviction that what is at issue is some great and just cause. Already some sections of the Government are concerned about the morale of the people, as is evidenced by the almost frantic efforts of the Ministry of Information. My own view is that there is not much to worry about at the present time, but I am certain there will be grievances when this tax comes into operation, and when every mother finds out what she is being asked to pay, in addition to that which she is already paying, and that other people are getting away with it and not making their extra contributions. People will be saying, "It is scandalous. This sort of thing ought not to be allowed." Opposition to the last Purchase Tax resulted in some modification, and in their innocence everybody believed that children's clothing was taken out of the scope of the tax. The impression was that a large family would not be called upon to pay anything extra, but when we go through the Schedule we find that a whole range of things, vitally necessary in every home where there are children, are included, and some of them at the rate of 33⅓ per cent.
The average working-class family of four can only afford winceyette or flannelette, but already since the beginning of the war, and because of this Bill, the price has one up by 40 per cent. to 42 per cent. And now there is to be added this tax at 33⅓ per cent. For many mothers the only chance of providing garments for children is to sit down and make them. Now they will be asked to bear this increase in cost, while the bachelor next door with a larger income, making no provision or contribution to the employment of this country, will look on and smile. No working-class mother can look on without feeling a sense of grievance and asking the question, "How can we fight for justice when this is the treatment we get at home?" That it is all eye-wash and a ramp, will be the conclusion.
Then, take the case of wool. Wool suitable for knitting children's garments costs about 6s. 8d. per lb. If the Financial Secretary to the Treasury can tell me that wool does not come within the scope of this tax, we shall be relieved, but I take it that wool is covered. The price has gone up to 8s., and there will be a tax on that figure. Part of the joy of a mother is to sit down in her few moments of leisure and knit small garments for babies, but every stitch she makes will remind her how much this Purchase Tax is costing. When people reflect on these things and realise the increased prices they are charged, which they are unable to pay because of their limited incomes, there will be a profound sense of grievance.
There is another case which will cause unsettlement in the hearts of the people. The young married couple will have to pay this tax because they did not get married a couple of years earlier. It was not their fault that they did not decide the year in which they should be born. Many people who have been evacuated have had to leave practically all their furniture, not because they have lost their affection for the household ornaments, but because they have been compelled by the necessities of the war to clear off with a limited amount of luggage. Either they or the people who are being compelled to provide them with hospitality will have to purchase additional furniture. People who take evacuees will, therefore, not only

have to provide homes for the evacuees, but will be compelled to make an additional contribution to meet the cost of the war, while the person next door, enjoying comfortable means and with rooms full of furniture he has never used, will look on and smile. Thus another sense of grievance will arise, and it will be justified. A number of houses have been demolished by air-raid attacks. Although I have not seen any in this war, I have seen what happened in Spain when a house was demolished by aerial bombardment. The furniture is of no more use, and it is a case of picking out the bits or sending it to a destructor, but what can be salvaged from a bombed home is not worth writing home about. The family which loses the whole of its furniture, which in many cases represents a life's savings, will have to pay this additional taxation when it buys new furniture. There will thus be a fertile ground for grievance which will take away all enthusiasm for fighting for the things that we hold sacred and dear.
Another grievance will arise because of the statement of the Chancellor that things which are already taxed will not be liable to the Purchase Tax. That holds good about wine, but it does not apply to patent medicines. I understand that on a 1s. 3d. bottle of patent medicine the tax is 3d., which represents 25 per cent., and on top of that will be added the Purchase Tax. That is a case of something already heavily taxed which will have to carry the Purchase Tax. Let us see how this operates because of the application of our law. The chemist will be able to get the medicine at a certain price. There is a slight difference now between the price at the chemist and the price at the grocer's shop. That difference will be increased by the Purchase Tax. I do not know whether it is the intention of the Chancellor to allow the incidence of the duties on patent medicines to put many of them into the higher category of taxation. If it is, it will only further aggravate the evil. I suggest that patent medicines should, like other taxed commodities, be immune from the Purchase Tax. This may seem a small and unimportant item, but in many homes these humble patent medicines have been a family tradition for years and are looked upon as being just as vital as wine is in certain other households—and they probably do just as much good if people believe they do.
An innovation to which I would like to refer is Clause 12 of the Bill, which does not allow insurance for war risks to be counted as an expenditure. I can appreciate the Chancellor's concern that this should not become a device for escaping taxation. At the same time, there is a case for every prudent business concern making provision against war risks. This risk will affect businesses all over the country, but it will particularly affect those in certain locations. In many of the coast towns the incidence of destruction may be fairly high, and business concerns, many of them small local businesses, are in such a position that they will lose practically everything and will have to wait until the end of the war before they can receive any compensation. In the same town there will be a branch of a multiple concern which has branches from Land's End to John o'Groats. The branch in a dangerous area is automatically insured because it is carried over the whole range of the firm's businesses. That puts the multiple business in a postion of unfair advantage compared with those businesses which have only one location, especially if it be in a dangerous area. While we are as anxious as the Chancellor that there should be no jugglery with war risks to avoid payment of tax, he might cover himself by giving himself the right to approve insurance schemes which are in his judgment satisfactory and legitimate. We would prefer, if it could be done, a national scheme to which everybody made their contribution compulsorily to meet war risks. That would be a genuine scheme to meet the situation. While, however, the Government decline to take the responsibility of initiating such a scheme, no hindrance should be put in the way of organising a sound, wise and equitable scheme of insurance against war risks. I hope that the Chancellor before the Bill passes will make provision on those lines.

8.20 p.m.

Mr. Craven-Ellis: The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) has put forward the proposal for a premium bonds issue. I want to say that I object to that method of finance, and I cannot conceive that even in war-time it would produce the money that is necessary or that it would be in the interests of those who took part in

that semi-gambling game. The hon. Member for Chesterfield (Mr. Benson) has very properly stressed his alarm at the possibility of inflation. We should make up our minds that inflation is inevitable if we are to finance this war on the principles which have been announced in the interim Budget as well as in the previous Budget. My criticism of the right hon. Gentleman would be this, that if he is going to adhere to his orthodox methods of finance, he should say to us, "I want so much from taxation, I want so much from loans, I want so much in some form of controlled inflation." As things are now, we shall reach the vicious circle of inflation one morning and shall not be able to withdraw from that position. After all, I think the majority would say that this was an orthodox Budget and it has satisfied the orthodox mind. It has also satisfied the great majority of the people, not because they are supporters of orthodoxy but because they have one determination, and that is to make whatever sacrifices are necessary to win this war. But, make no mistake, those people are thinking very deeply, and I question whether orthodoxy will prevail at the end of this war as the dominating factor.
We have been at war for 11 months, and if there is one outstanding blunder, I should say it was the lack of foresight. The Government should have been thinking years ahead, and when the war started all should have known exactly where they had to go and what was their position. Man-power and wealth should have been immediately mobilised; prices and wages should have been fixed in this House on 3rd September at the level at which they were on 2nd September, and there should have been no variation. It is true that costs have risen as a result of war risk insurance and the increase in world commodity prices, but those increased costs could have been and should have been absorbed by the Exchequer rather than allowed to go all through the processes of production, at each point raising costs and giving a percentage of profit, and ultimately increasing the costs of war equipment, which in the end the Chanceller has to pay. Even though the war has been going on for 11 months, I do not think it is too late to decide that prices and wages shall be at a certain level from a certain date.
It is rather interesting to compare the method of financing this war with the method which was adopted in the 1914–18 war. In the last war we allowed high wages, and we allowed those wages to be circulated through the shops. Consumable goods were produced in quantities which enabled a large part of that additional purchasing power to be absorbed, and at each stage the legitimate profits were taken until, at the end, the major profits rested with the industrialist, the retailer, and the highly paid executive. By all outward appearances the country, although at war, was in a state of fairly high prosperity. To-day the whole plan has been changed and I am rather doubtful whether it is a wise change. What have we done? We have decided to finance this war mainly, in the first stage, out of the velocity of money, that is wages, and to restrict consumption—and very properly so within this principle of finance. But loans to any amount will not come from the industrialists or the retailers. Go into any city and look at the number of shops now standing empty because there is no trade.
We shall not get loans from the same section of the community as in the last war. We are going to rely upon wages, but let us not forget that a large percentage of the people who now are in receipt of high wages are people who, since the boom broke in 1921, have been suffering long periods of unemployment or under-employment, and we cannot blame those who are not buying National Savings Certificates. After all, what is their first consideration? Having come into a position where they are in receipt of more adequate wages, their first consideration is to restore the standard of their homes and of their personal wardrobes to that of 1921, before they entered on that long period of depression. Therefore, before we get to the peak of voluntary savings, which will not be before the end of 1940 or 1941, if we carry the financing of this war on orthodox lines, I am doubtful whether we shall get the money.
Before I finish I propose to give the Chancellor an alternative method of finance. Last week, as on a previous occasion, the Chancellor laid great stress upon sound finance. Exactly what does he mean by sound finance? One would assume that over the last years we have

enjoyed what he terms sound finance, but what has been the result of this sound finance? We have had as many as 5,000,000 people unemployed. When war broke out we had more than 2,000,000 unemployed. [An HON. MEMBER: "And more millionaires."] I do not mind the millionaires as long as the other fellows get a square deal. We are told that more than 20,000,000 people suffer from malnutrition. Is that sound finance? That is what we are experiencing under so-called sound finance. My interpretation of sound finance would be that we reach that stage when the people as a whole are in receipt of adequate remuneration and industry enjoys a fair measure of prosperity. We have been at war for 11 months, but we are not even yet organised for total war. We must make up our minds that, if we are to win this war, we must be organised for total war. The delay, month after month, while victory is certain, merely means that the loss of life and of material will be greater than it need be.
On 3rd September I came to this House and took part in passing something like 23 Bills—I forget just how many. I should have liked to have seen among them a Bill to tell this House and the country what industries were to be fully engaged on war supply, what were necessary to carry on our export trade—which is so very necessary to pay for the enormous amount of imports which we have to bring to this country to help us to carry on the war—and, thirdly, what industries were to be fully engaged in home trade, on the basis of consumable goods. Nothing like that has happened, and we are still making suggestions. At Question Time to-day, Members of this House put forward points and received replies which clearly indicate that, after months of war, we are not yet organised. I say to the new Members of the Government of all parties "Go to it. There is a lot to be done. This House will find the money, to do it." I do not want it to be found, as it apparently is being found, in a way which is crushing one section of the community and, in due course, will crush the whole community. A Purchase Tax is provided for in the Finance Bill. It is a very admirable tax.

Mr. G. Griffiths: We do not think it is.

Mr. Craven-Ellis: Apparently I look at this matter from a very different viewpoint from that of hon. Gentlemen on the other side. May I remind hon. Gentlemen that each nation in this Commonwealth of Nations has a Purchase or Sales Tax, and the percentage to National Revenue is: Australia 14 per cent. and Canada 36 per cent. Germany and France have a Purchase Tax, and Russia has one as high as 86 per cent. I do not look at firs tax merely for raising money. It is a very important introduction in the finance of this country. I accept the Purchase Tax not for what it will produce during a time of war—it may be £40,000,000 or £100,000,000—but because it is a balancing factor in industry. It can be used to check industry where there is a shortage of demand. I look upon it as something which will be operated not only once a year, when the Finance Bill is introduced, but used at different times of the year to assist the re-employment of the people.
Reference has been made by the hon. Member for Gloucester (Mr. Boyce) to E.P.T. I tell the Chancellor of the Exchequer that the introduction of a 100 per cent. E.P.T. is a great mistake. First of all, it robs industry of enterprise and initiative. It undoubtedly is contributing to the higher cost of munitions, and I have been told—I should like my right hon. Friend to say whether this is right or wrong—that, in some cases, where employés are contributing to National Savings Certificates, the employers make a similar contribution, and are allowed to debit the contribution to the general expenses of the company. If that is correct, it means that the men contribute say, 5s. a week each, and the employer 5s. The payment has gone into the cost of his production, for which the Government are paying, and therefore the Government are paying 3 per cent. on nothing. It is nothing, because the matter has been cancelled out by that transaction. I would like my right hon. Friend to say whether that is the position.
A week ago, I asked the Chancellor of the Exchequer to tell the House the approximate amount of the national income. The Financial Secretary to the Treasury replied that we had no definite information. Later, when the Chancellor made his Budget Statement, he used the figure of £5,000,000,000, putting it forward as the generally accepted peace-

time national income. Later in his speech, he proceeded to give the expenditure which the national income has to meet, mentioning first of all the amount of taxation. Then he went on to speak of tobacco, clothing, consumable goods and so on. If you total these figures, you find that he left himself, on his own national-income estimate, with £254,000,000 and that, together with the loans which he can get, mainly what we call institutional loans, he has to finance a gap of £2,200,000,000. I can see no hope of his being able to finance this war if the national income is not more than £5,000,000,000. I am using his figure. My estimate would be nearly £7,000,000,000, but even though it be that figure, the policy of finance which has been decided upon is to collect for war expenditure from the first stage of the velocity of money, which is wages. Under present arrangements, I therefore say that my right hon. Friend will not be able to finance this war without putting upon this country a most impossible burden.
I said I would give an alternative method of finance. I have always been a critic, but I have never felt that I was justified in being a critic if I was not able to substitute something for that which I was criticising, whether it was acceptable or not. The method which I put to the House is this, that the Government Departments which are incurring expenditure on account of this war should pay the manufacturers by a commercial bill, and that the industrialists receiving that in payment for the goods supplied would discount that bill with their joint stock bank. I would suggest that that discount rate should be one-eighth of 1 per cent. and it would be an obligation upon the joint stock bank to rediscount that bill with the central bank, the Government guaranteeing that bill, and that the central bank, being in possession of that commercial bill, would then use it as the basis for the currency of this country; and to the extent of the volume of these commercial bills for war purposes I should dispose of the fiduciary issue Treasury bills and also bank money. This does not mean that if we pay for this year's war expenditure by commercial bills there will be £2,000,000,000 of currency in circulation. They would do just the same as America


does with her gold. She has over 70 per tent. of the gold of the world, but it is not in circulation. She does not require it in her monetary mechanism. She puts it underground, and it is not used. From a monetary point of view it is of no value to America. Therefore, there is no occasion for us to use these commercial bills in excess of what is required for immediate currency purposes.
What would be the position if we were to finance the war by commercial bills? Some people may say, "This will be a matter of inflation." As I understand monetary mechanism, I cannot see the first suspicion of inflation, because these commercial bills would not be subject to a rate of interest upon which the taxpayer would have to pay, but the taxpayer will have by taxation to reduce the amount of commercial bills in a period of years—I say 30 years—so that for each year the taxpayer will have to find by taxation one-thirtieth of the amount of commercial bills, and in 30 years the whole of those commercial bills which would have been used to finance the war would expire automatically. Suppose the war should cost us £7,000,000,000. The annual charge to the taxpayer would expire, and that volume of commercial bills would be in the neighbourhood of £270,000,000 per annum—about half the new taxation which has been imposed on us since the war started. I suggest to the Chancellor of the Exchequer that he gets out of that present orthodox attitude into which he has got, because we shall not be able to finance this war by the present method unless we put such a burden on the people that many might ask whether victory was worth it.

8.46 p.m.

Sir Richard Acland: I hope that the hon. Member who has just spoken will forgive me if I do not follow him, partly because I do not know that I am qualified to do so, and also because I particularly wanted to refer to two speeches which seemed to me to be the most outstanding we have heard this evening. One was by the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) and the other by the hon. Member for Ince (Mr. G. Macdonald) who spoke from different points of view on the same problem, namely, the high wages which

are being paid. I particularly admired, if I may say so respectfully, the extraordinary frankness of the hon. Member for Ince, who told us that from the point of view of the working man he resents the anomalous position in which a family, the members of which are engaged probably in engineering, draw high wages, whereas another family whose sons have gone to the war are living in circumstances of very great hardship. I am convinced that this anomaly—first because it is an anomaly, and secondly in order to meet the financial and economic situation—will have to be brought to an end before long, by requiring of those workers who are wealthy, a substantial postponement of a large part of the purchasing power now coming to them. I regard that as inevitable.
What I want to put to hon. Members, and particularly to the Chancellor, is: what quid pro quo must be given to the workers if they are to suffer this postponement of a substantial part of the purchasing power now given to them? That is the problem to which I do not think the Chancellor, or Mr. Keynes, or hon. Members opposite, including the hon. Member for Kidderminster, have really addressed their minds. What new principles are we to adopt, if people are to be asked to adopt this new principle of postponed purchasing power? I am going to make some rather drastic suggestions on my own account. What does the Chancellor expect this country to look like in 1942 after all these means of destruction, accumulated in this country and in Germany, have been mutually poured out on each other? Shall we really be able to continue this gentlemanly kind of finance which we are now undertaking? I think things will be so different as to be quite unrecognisable. I do not think the Chancellor could move to the new system in one bound, but he and his advisers would do well to think about it, and to show in the next Budget that they are making a move towards it. We must, first, give up the principle of equality of sacrifice and adopt the principle of equality of standards, which is quite a different thing. I want to see the soldier's pay brought up to a reasonable figure, and then I want to see everybody else put down to a soldier's pay, whether he is a skilled engineer or not, because I am sure that the skilled engineers would not resent going down to


the level of the soldier's pay if the company directors and the landlords were going down to that level as well. Of course, such a principle would require the Chancellor to work out a very extensive system of moratoria. That is all right; for to whom are those payments owed, on which moratoria have to be made? They are owed to other people who are coming down to soldier's pay. We have to realise that it is all wrong to think that there is a private pool of income which each individual has a right and a duty to earn, so that the Budget may come along and take oat what is required for expenditure.
This time next year the budgetary problem will be that of how the whole population of the island is to be fed, clothed and sheltered, so that each person may get on with his job, whether it be that of a company director, an engineer, or a soldier. The budgetary problem will not be one of taking from the people something that they have got; it will be the instrument by which the Government, running the entire country—remember that the Government are now running about two-thirds of the country, and will be running the whole of it before we have finished with our war economy developments—will give the people their share of the supplies which the nation has at its disposal. This will require a complete alteration in our point of view. To-day, we assume that a man has some sort of sacred right to the income that he happens to be receiving, and, therefore, that to take something from him, involves sacrifice on his part. If you take 5 per cent. from a poor man, 10 per cent. from a less poor man, 25 per cent. from a fairly rich man, and 50 per cent. from a very rich man, that is talked of as being equality of sacrifice. The Chancellor of the Exchequer speaks of it as being terrible that a man should have to sacrifice half his income in taxation, leaving him with a mere £50 a week. But instead of the question being, "What is this man's income, and how much do we take away from it?" we should ask, "How much is this man's income, and how much does he need to maintain himself at what he is doing?"
I put it to the Chancellor that one principle, at least, could, and should, be accepted very quickly now. That is, that if you are to have deferred pay, the other thing you must have is deferred

compensation for any property that this nation takes over, either permanently or temporarily. If a man can get along very nicely, as things are, you will not be in a position to put in his hands purchasing power which he can use immediately in terms of a demand on our purchasable goods. He will have to be told, "You will make out a claim, which we shall consider when the war is over, along with the claims of those who have lost eyes, arms, legs, and relatives." I want to end on a personal note. I spoke once on these lines before, and people said to me afterwards, "Why do you not do it yourself?" On this occasion, I can say that I have done so. Government Departments have requisitioned some of my property, and, as I do not think it right to receive what they have paid me in compensation, I have sent the money back. Let me say to the Chancellor that if any other Departments requisition any of my property, I shall send back what they send me. These sums are so small that I need not act anonymously in returning them, as was done by Lord Baldwin—then Mr. Baldwin—in similar circumstances.

8.56 p.m.

Sir Irving Albery: I am sure the House will have listened with sympathy to the statement that the hon. Member has just made. The lot of the Chancellor of the Exchequer is always a difficult one. In peace-time he endeavours to impose as little taxation as is necessary to balance his Budget; and the efforts of this House are usually devoted to pointing out that he has imposed too much taxation, and in doing everything possible to persuade him to reduce taxation in one or more directions Now, in war-time, the Chancellor imposes as much taxation as he thinks he can reasonably collect for war purposes and, as far as I can see, most Members are trying to make out that he is not collecting enough. I share the view that we have to collect in taxation as much as can be collected without causing more damage than benefit in the collection of it. It is absolutely true that in the higher grades of taxation the upper limits have been reached, at any rate for the time being; and it is also true, as was pointed out by the Chancellor, that people must be given some time to adjust themselves to vary radically changed conditions. These


things cannot be done at a moment's notice; and, in so far as they are done, they cause suffering, not mainly to the persons who happen to possess the means but to other persons dependent upon them. That has to be taken into account.
There has been a good deal of discussion to-day as to the proportion which can be raised by taxation and by loan, and as to the effects of inflation. It appears to me that as much as possible must be raised by taxation, with the qualifications I have just mentioned. One will obviously raise by loan as much as one can get. On the whole, the finances of the nation in that respect have been remarkably well managed, considering the rate of interest at which we are borrowing. I am definitely of opinion that we cannot get through a war like this without some measure of inflation. The main thing is that it should be controlled inflation, and should not be allowed to run away with us. It comes to this, that we have to meet the expenditure of the war as far as possible by much higher taxation and by maximum borrowing, and that the gap has to be filled by some degree of inflation.
That brings me to the next point. It is probably the only criticism I have to make of the present policy of the Chancellor of the Exchequer, and I do not know whether it is quite justified, because I do not know what his future intentions are. When you get very heavy taxation, it becomes more than ever necessary that the burden should fall equitably and fairly upon the whole of the population, and in my view that is, unfortunately, not the case to-day. From the rich you are entitled, as I said before, to take all you can get, provided that in getting it you do not damage the national economy. Nobody will be very sorry for the very rich, and the Chancellor of the Exchequer is taking from them to-day all that he can get at present. How is the burden spread over the rest of the population? There are many people who are worse off to-day than they were before the war; there are many people outside the Services who are earning much less than they did before the war, and the increase in taxation is naturally causing some hardship to those people. On the other hand, we have a very large section of the population who are, definitely, earning to-day more than they ever earned before.

Mr. Gallacher: You mean the bankers.

Sir I. Albery: No, I mean all kinds of people. I am not talking only of those who are working in the armament firms. They are not the only people. There is, for example, the managing director, who might have been earning £2,000 a year before the war in an armament firm, whose services were so much in demand that another armament firm offered him £5,000 a year, who left the first firm and went to the second firm, and is now earning more than double what he did before. I am only giving examples, and there are many others. If the burden of the war is to be spread equally then, definitely, those who are better off to-day than they were before the war, and mostly through the war, ought to make a special contribution towards that burden. People have discussed this afternoon—and I do not want to repeat what has been said—the differences which exist in families where there is a husband, and possibly a son, both on active service, and next door, a husband, and possibly a son, are doing valuable and good service on armaments. There is no getting away from the fact that people are noticing and emphasising the difference between the positions of those two families.
That, again, is not confined to workers, to what are familiarly regarded as the working class. It exists also in the professional classes. There is the case of the young professional man, with a wife, and perhaps two children, who may be earning £1,000 a year and very likely has taken on obligations such as school bills and a flat at £250 a year in London. He is now called out on service—he very likely joined a Territorial unit a year or so beforehand—and he has lost the whole of his income, and is getting soldier's pay and soldier's allowances. On the other hand, next door, there may be a cousin of his, or a friend, who happens to be in some reserved occupation, possibly in an armament firm. He is earning better money than he ever earned before. These things are not equal, and as long as the war goes on, the more they will be noticed. If they are not remedied, they will cause ill-feeling and disunity in this country. I am convinced that in a later Budget, perhaps in the near future, the Chancellor of the Exchequer will have to take this into account. Many are of opinion that the simplest way to deal


with this problem would be to put on an excess Income Tax, to be deducted from all incomes which are above those earned in what one might describe as a standard year, just as is already done with excess profits. While I am on the subject of the Excess Profits Tax I must say that it is by no means watertight. There are a good many loopholes. In a good many concerns to-day, incomes can be increased without the income of the company being affected. The House of Commons has decided to take the profit out of war; we have subscribed to that principle and we have agreed that the service and property of every individual should be for the State. Having done so, it seems to me vitally necessary to distribute taxation so that those who are benefiting from the war should make a substantial contribution out of that benefit.
As regards handing over property to the service of the State, I would like to make the point, with reference to the welfare of part of the community, that there is no reason to try to take, in yearly taxes, more than you can reasonably expect to gain. I think everybody is agreed that, when this war is finished, there will have to be a capital levy of some kind. Therefore, there is some sense in not unnecessarily damaging capital. On the policy of the country during the war and on the policy of the Chancellor of the Exchequer, the effect on capital and on capital value will be very much dependent. There is a good deal to be said for doing what we can to maintain capital value, not only so that we should get sufficient revenue from Estate Duties but also that a capital levy should be profitable. To come back to the point about excess Income Tax, it seems to me that it should be made on approximately the following lines: For the purpose of the Excess Profits Tax you take a standard year and I would take the same standard year for excess Income Tax. Everybody making a bigger income than he was making in the standard year, should make a contribution of 50 per cent to the State before any other taxes are levied—

Mr. Loftus: Fifty per cent. of the excess?

Sir I. Albery: Yes, of the excess although you would need some basis for that excess. You must consider the man who may have been unfortunate enough

to have been out of work and I would suggest £4. or £5 a week as the basis. A man earning £5 a week to-day would have nothing to pay but a man earning £10 a week would have to pay the difference between £5 and £10 unless he could show that during the standard year he was earning a bigger income than £5 per week.

Mr. Glenvil Hall (Coffie Valley): If I understood the earlier part of the hon. Member's argument, what he has just said should be £2 10s. and not £5.

Sir I. Albery: I said the difference. I ought to have said 50 per cent. of the difference between £5 and £10—unless he could show that during the standard year he was earning a bigger income than £5. But I am not tied to any of these details. I have only mentioned them so as to give the House an example of the kind of thing I have in mind. These things all require a great deal of careful consideration, and I have not been able to make the careful study of the question which would be necessary in order to put forward any definite proposition. I only want to put the general proposition before the House. I am convinced that that is the proper way to raise a further contribution towards bridging the gap. It is necessary not only with a view to raising the extra money, but it is equally necessary as being probably the best way to limit that extra consumption, which we cannot afford at present.

9.12 p.m.

Mr. Key: I am a new Member of the House and therefore not learned in the law of interpreting its mind, fathoming its moods or judging what it thinks or wishes, but as I sat here to-day I had to rub my eyes and pinch myself a little to appreciate that the scene before me was real and that what we were discussing was a Budget of a nation which was really in peril of its very existence. It seemed to me that the thing that we were discussing was a make-believe sort of affair and that this Bill embodies nothing like a victory Budget at all but merely the proposals of a timid, nervous little man called to great things faced with a great task, given a great opportunity, yet able to do nothing great, but make a great surrender to class privilege and class interest. What does all this talk about an interim Budget


mean? It means that the Chancellor himself knows that the proposal that he has made is not good enough, that it is merely a makeshift affair, which must be made to serve until something better is forthcoming and someone bolder takes hold of the job and does it as it should be done. We cannot win this war on makeshifts. It is because we tried to do so that we find ourselves in the predicament that we are in to-day. For years we tried makeshift diplomacy—a so-called settlement which could be made to serve for the time being and little bits of peace which were the very means of shattering peace to bits. We tried makeshift organisation of supply and makeshift direction of our labour power and, as a result, found ourselves in the sea off Norway and beaten back to the beaches of Dunkirk. Some of us had hoped that the makeshift régime was ended and that we were really getting on with the business, but here again, we are faced with further makeshift finance.
Why is it that we are called upon to take off the gloves in order to deal effectively with the efficiency which we find abroad, and then must put on a pair of extra velvet for fear of dealing too harshly with the inefficiency which we find at home? This Bill is an indication of the inefficiency to be found in the Treasury of this country. Members of the Government make eloquent speeches about Britain being a beleaguered fortress, about everybody being in the front line now, about every Tom, Dick and Harry working and toiling and sweating to the uttermost, but when it comes to dealing with Algernon and Marmaduke, we must tread warily for fear of undermining morale in the presence of property and wealth, we must stand abash, and while asking for the most severe sacrifices elsewhere, we must be careful to preserve the privileges of capital and class. You cannot measure sacrifice by percentages on the Surtax. It is not what I give; it is what I have left after giving which is the measure of my patriotism at this hour. The working man who comes forward as a common soldier and gives all he has, his power to serve, to suffer, and to die, gets in return but hard keep for himself, and for his wife and children the munificent reward of 27s. a week; but the man with an income of £5,000 a year, who gives nothing but his money, even

after the full effects of this bold Budget have been realised is left to struggle on in penury upon a paltry pittance of £50 a week.
Who dare talk about equality of sacrifice in circumstances such as those? If this be a beleaguered Britain, if we are really in this business, then let us be in it with all that we have and are. In those conditions, no question of privilege can arise except the proud privilege to give, to serve, and to die. We can go on fiddling here with farthings upon schoolboys' "penny dreadfuls," halfpennies upon cinema seats, and petty impositions upon lipstick and rouge, but all the time the horror of it is that it is not merely a miserable farce, but it is a base betrayal of those who sacrifice everything in the cause of liberty and love. I am not concerned to-night to argue the case of taxes versus loans, direct versus indirect taxation, more on beer, less on books; my purpose is to register my protest against the gross ineptitude in face of the problem which confronts this country which this Bill actually reveals. The poor, from whom I come and whom I am glad to serve, are in no mood to tolerate further paltering in this matter. Everything is at stake, and therefore, we must stake everything upon this issue. A Budget based upon that conception will command the support of us all. Give the people proof that nothing short of everything is the limit of our effort, and their response will bring overwhelming success to our cause.
How is that job to be done? First of all, any sane system of war finance must be based upon a wider, fuller and fairer system of rationing, bringing in everything necessary to maintain the people in health and strength, housed and clothed to give that essential national service which must become the main purpose of their existence until victory is complete. That rationing must be accompanied by a strict system of price control, not merely for the purpose of preventing profiteers from plundering the public—a practice they are very proud to follow—but in order to save us from the chase of wages after prices which not only will rob us largely of the benefit of our rationing, but will cause serious dislocation in our producing power. Then, in order that everybody may be able to purchase that necessary health ration, purchasing


power must be guaranteed. That, alas, in this community will mean in many cases that income has to be increased, but since the raising of wages would start that chase which we wish to avoid, and at the same time might have very serious effects upon particular industries, especially those industries engaged in keen foreign competition, the end which we wish can be better secured by a system of family allowances. After that is done, and everybody is guaranteed that necessary health ration, whatever purchasing power is left over should become available for the national need for the conduct of the war.
We can and should allow certain recreation and amusement, and, as long as we can stand it, small and simple luxuries; but the rest should be taken wholly or in very large part from all parties and all types by direct taxation. That is an outline of a Budget for a beleaguered Britain. When it is said that even that will not give the necessary pounds, shillings and pence, let the Chancellor, and the Government, create whatever cash they require, because their rationing and their price control will prevent inflation. If it is said that that requires a good deal of courage, my reply is that, of course, it does. For that very reason I am afraid that the present Chancellor of the Exchequer is one of the very last persons from whom we can expect it, because it is this very quality of courage which the present Bill shows is so appallingly lacking. That lack of courage is really an insult to the people of this country, because it shows a lack of faith in them, and a lack of confidence in their determination to do or give all and suffer all in the cause of liberty, which for most men of our race is dearer, not merely than property and privilege, but than life itself.

9.25 p.m.

Mr. Brooke: I do not often find myself in agreement with the hon. Baronet the Member for Barnstaple (Sir R. Acland), but he evidently agrees with me that during this evening we have listened to two outstandingly impressive contributions to the Debate—not contributions to our Debate only, but contributions to the whole problem of national finance, yes, and to victory itself. First, I would name the speech of my hon. Friend the Member for Kidderminster (Sir

J. Wardlaw-Milne), under whom I am proud to serve as a member of the Select Committee on National Expenditure. In that connection I always find myself regretting it when hon. Members here or outside the House make sweeping charges of extravagance and waste against this or that Government Department and do not follow them up by giving whatever facts they know to the Select Committee. It has been something of a surprise to me, as a member of that Committee, that relatively few particular cases of alleged waste have been given to us by our colleagues in the House. The other speech to which I would like to pay my tribute is that of the hon. Member for Ince (Mr. G. Macdonald). I do not agree with all that he said, and I suppose that he and I are political opponents, but with respect I would like to congratulate him on the real British courage with which he addressed the House to-night.
I do not know whether I am representing the general sense of the House in saying that what we criticise in this Budget is not so much its contents but its timing. A Budget which would have been appropriate months ago is inappropriate now. The Chancellor has given us as a defence, and I think it is the only possible defence, that it is an interim Budget. Instead of hurling abuse at the Chancellor, instead of suggesting, as one hon. Member did, that the right hon. Gentleman has not the faintest understanding of his subject, is it not more useful for the House to try and discover the causes why at this stage of the war we have a Budget which strikes us as several months out of date? I think that there are two main reasons. One is that the Treasury is obviously more on guard than its critics against overestimating the rate of economic change which can effectively be brought about by taxation. That is right to this extent. If, in fact, we were to accept to-morrow the proposal of the hon. Baronet the Member for Barnstaple for equal incomes throughout, we should, even though he denies it, jam the whole economic system. Indeed, London Members must know from their experience of their constituencies that a great deal of unemployment has been created in London by the direct incidence of taxation since the war began. I am exceedingly glad that several hon. Members have laid stress on this phenomenon of continued unemployment


in war-time as a matter very relevant to the national Budget. But I think the House must make up its mind what limitations it is to set on the Chancellor's powers. If he is to possess the widespread economic powers which many hon. Members have asked him to use, he must be a member of the War Cabinet. If he is not a member of the War Cabinet, he cannot be expected, as hon. Members have begged him to do, to give orders to others of his colleagues with whom he is on an equality.
The second reason why I think we are behindhand in the imaginative quality of our Budgets is the terrific strain which is exerted by the war on the senior officials of the Treasury. Most hon. Members, myself included, have said hard things about the Treasury at some time or other in our lives, but I certainly hold that the senior officials of our Treasury are among the ablest and most public-spirited servants of any nation in the world. I cannot help thinking that the sheer work of carrying on the war must have thrown upon them, in these opening months, an almost intolerable strain of detail and has not given them sufficient opportunity to devote their minds to that fundamental thought about new systems of war-time taxation which the situation has required. I dearly hope that the Chancellor will take such measures as he may to relieve some of his key men from that daily strain of routine work, so that they may be enabled to think out fundamental new plans of taxation in the manner which this House undoubtedly expects of him and the Treasury.
I am bound to say that when a Chancellor does respond to the strong invitations to exercise his imagination and devise a new tax, he seems to incur an undue amount of criticism. The one new notion that has been produced by Chancellors of the Exchequer since last September is the Purchase Tax. In my view our duty as a House is to lay the foundations of that new tax aright. Hon. Members in one part of the House or another may like it or may not like it, but this is not the time to turn down new proposals for taxation out of hand. My reason for believing that it can be made into a sound tax is because it is working acceptably in many other countries. If this House does its duty, it can forge

that Purchase Tax into a very powerful weapon of war finance.
Now I turn to the Income Tax. Under the Income Tax as it stands two sets of people are definitely under-taxed, first, single persons with no family responsibilities, and, secondly, those to whom my hon. Friend the Member for Gravesend (Sir I. Albery) has so aptly referred, the people who are enjoying increased incomes since the war began. Let me take the first class first. Of two men with an income of £700 a year, the married man with two children will have left to him, after taxation, £595, and the bachelor will have left £525. If that sum of £595, for a family of four to live upon, is correct, and represents a fair incidence of taxation, the bachelor is getting off too lightly. Take it at another level; take two men each earning £1,250 a year. The married man with two children will be left after paying tax with £950; the single man will be left with £880. One or the other of those two residuary figures, left after taxation, is wrong, and out of relation with capacity to pay.
Why must we retain this traditional system of a standard rate of Income Tax which nobody, in fact, pays? Why continue to talk about an Income Tax of 7s. 6d., 8s. 6d., or 9s. 6d. in the £? I have been looking at the figures, and hardly anyone with an income under £3,000 a year actually pays as much as 8s. 6d. in the £. To put the argument the other way, in order to have a net income of £10,000 an individual—and I do not envy him—has to possess a gross income of not less than £70,000. That position is largely concealed from public understanding by this continued talk in terms of a fixed standard rate of tax. Why cannot we give up the complex system of allowances? Why have we to maintain the Surtax as separate from the Income Tax? Why should we keep these tabulations in the White Paper which show people who pay tax at 1s. or 4s. 11¾d., or 9s. 1d. in the £? Why cannot we have simple rates for different income levels as we have for Death Duties on capital values—one scale for bachelors, another for married men, with further scales for married men with one, two, three, or more children? That system would be intelligible to anybody, and meet the point which was made by my hon. Friend the Member for Kidderminster that we should impose direct


taxation and make it felt and accurately understood by as many people as possible, from the basic minimum level right up to the top. If we could do that, and accept this new presentation of direct taxation, the Chancellor would be free to devise a better graduation of tax all through, completely unhampered by these traditional allowances and by the fetish of the standard rate.
I was intending to put forward, in conclusion, a proposal in reference to which I should like to congratulate my hon. Friend the Member for Gravesend on preceding me. He made the suggestion far better than I could have done. I am certain that the Chancellor of the Exchequer must devise, before his next Budget, some system of personal excess Income Tax. Let us look at it in this way: to live on £300 a year—£6 a week—may be penury or it may beriches. It is penury for the family that has been accustomed to living on £20 a week; it is riches to the family that has been accustomed to living on £2 10s. a week. In these times we cannot afford to ignore this very important fact of movement of income. Our existing system of taxation entirely ignores it. The one principle universally accepted is that no one should be rendered better off by the war. I hope that the whole House will appeal to the Chancellor to plan a new tax of this kind in time for his next Budget.

9.41 p.m.

Mr. Deputy-Speaker (Colonel Clifton Brown): Captain Crookshank.

Mr. Sloan: On a point of Order. Is the Financial Secretary closing this Debate?

Mr. Deputy-Speaker: The Financial Secretary is rising to take part in the discussion. I cannot say that he is closing it.

Sir Henry Fildes: On a point of Order. When the Financial Secretary gets up we all know that the time is going on, and we have a lot to say yet. If he could defer what he has to say until he has heard the speeches from the rest of the House, it would be a matter of advantage.

Mr. Deputy-Speaker: This is not a point of Order. The Financial Secretary caught

my eye. [An HON. MEMBER: "We do not want to hear him."]

9.43 p.m.

The Financial Secretary to the Treasury (Captain Crookshank): I never like to hear my own voice, so I can sympathise with the hon. Member. There may still be some speeches undelivered, but, of course, this is not the end of the financial business connected with this Budget. It is hoped, however, to get on with some other business of considerable importance before we rise.

Mr. Sloan: May I point out that we have heard speeches which have already been delivered?

Captain Crookshank: I am very sorry that anybody should have repeated his previous speech and that I missed an opportunity of hearing the hon. Gentleman, but there are other occasions. We are working under considerable pressure in war time, and I hope that I shall not be doing anything wrong in the opinion of the majority—

Mr. Sloan: May I point out—

Mr. Deputy-Speaker: The Financial Secretary did not give way to the hon. Member, and therefore he cannot interrupt except on a point of Order.

Mr. Sloan: I want to know why the Financial Secretary is now taking part in this Debate. He said that he is doing it with the permission of the House. When did he have the permission of the House to do anything of the kind?

Mr. Deputy-Speaker: The Financial Secretary rose, he caught my eye, and I called upon him.

Mr. Sloan: It is done by arrangement.

Mr. Deputy-Speaker: Certainly not. It is done by catching my eye and not by arrangement.

Captain Crookshank: I hope I may be allowed to answer some of the points which have been raised up to now. My right hon. Friend has received many suggestions which it will be his business to consider in the days to come, whether in connection with this Bill as some of the points were, or in connection with the larger matters of finance of the war. The right hon. Gentleman who followed him was good enough to give us for the first


time the use of the word "milliard." I am not sure that I approve of it, but, of course, the figures which he used are very large, and I can assure him at any rate, without commenting in any way on what he said were mere conjectures, that the Government are certainly alive to the very large problems which would be involved in a long war. In this House we bandy about these figures of £1,000,000,000 this and £1,000,000,000 that, and I wonder whether hon. Members have any conception of what that sort of thing means. I dare say that in our own constituencies, or in connection, perhaps with charities in which they are interested, they sometimes make a practice of appealing to the generosity of the public by contributing to a "mile of pennies." I have worked out what £1,000,000,000 if laid out in pound notes would extend to, in miles. It may seem a rather schoolboy kind of calculation, but actually a pound note is approximately six inches in length, and if you stretched out 1000,000,000 of them like a ribbon, the result would be a ribbon which would cross the Atlantic 31 times or go round the world nearly four times. That calculation is of no importance or value, but it does remind people what these colossal figures mean. That was the sum involved in the last financial Debate.
There have been running through the speeches again to-day, from several hon. Members, allegations of waste here and there in connection with the Government's expenditure. I can only say once more, as I have repeatedly said in financial debates since the war started, that the Chancellor of the Exchequer, I myself, and the Treasury are vitally interested that that sort of thing should not occur. It was for that reason that my right hon. Friend's predecessor was glad when the suggestion was made that a Select Committee should be appointed to go into the question of national expenditure. That Committee is doing very valuable work. I would beg hon. Members not to make allegations at large in this House, but rather to follow the advice of my hon. Friend the Member for West Lewisham (Mr. Brooke) and either to take specific instances to ourselves at the Treasury or, considering that our colleagues have been charged with this particular duty, to take to them any cases that may be tracked down, so that the evidence may be sifted.

Then, if there is anything in it, not only Parliament, but also the spending Department concerned, will be acquainted with it.
The right hon. Gentleman also made a suggestion that there should be a cut in the short term rate of interest from ½ per cent. to ½ per cent., or perhaps ¾ per cent.; and he raised, once again, the question of Treasury Bills. As this is a matter of some importance, which has been raised in the House before now, it may be as well if I give on that point the considered view of my right hon. Friend. It is a well-known fact that it has been the policy of the two Governments which have been in office since the war started that we should try to raise the vast sums required for the war on terms which place on the Exchequer as low a burden as is reasonable in the circumstances. That is an agreed policy, and I think the right hon. Gentleman will say that we have been successful. He has never made any grave criticism of the general structure of interest rates on which we have been able to borrow so far, and I need not remind the House that the series is greatly lower than obtained in the last war. The Treasury bill rate is itself related also to a structure of interest rates upon short moneys. First of all, the rates normally paid by banks on their deposits—not, of course, on current accounts—is ½ per cent. The clearing banks rate for short-term loans is ½ per cent., and the rate on three months' Treasury bills is a few pence in excess of that rate. The natural rate for Treasury bills, which is fixed by competitive tender, depends on many complicated factors, of which the volume of Treasury bills is only one. The short-term money market is a very elaborate machine, but it is essential that its working in war-time should be effective in order that we can raise the enormous sums that we need. My right hon. Friend certainly thinks that he would not be performing a service but a very great disservice by taking any ill-considered action which might derange it.
When we have gone over the criticisms which have been made in this House, some of them in the recent Debate on the Vote of Credit and some in earlier speeches, we have detected what are in fact two objections in the minds of critics about the present position. The first line


is to say that the banks, from whose deposits much of the money directly or indirectly comes, should not pay interest on the deposits they receive. Of course, the banks do not pay interest on current accounts, and on ordinary deposit accounts their normal rate, as I said just now, is ½ per cent. It is true that it has been the practice in some parts of the country to pay rates of interest up to 2½ per cent. on special deposits—I think the right hon. Gentleman is aware of that—and that custom is in fact a legacy from the practice of local banks before the large amalgamations took place. Steps, as far as that is concerned, have recently been taken to arrange that for future deposits a maximum of 1 per cent. should prevail where previously higher rates had obtained. My right hon. Friend does not see any adequate reason for going further at the present time, and I think it would generally be accepted that the payment of interest on deposit accounts is useful to the extent, that it is a deterrent against spending and against people taking their money out of deposit and using it in current expenditure.
The second criticism, which was much more bluntly put by hon. Members who are not here at the moment, is that the I per cent. lending rate of the banks yields them an excessive profit, and that a very large part of it is ultimately at the expense of the Exchequer owing to the volume of Treasury Bills. The right hon. Gentleman and others should realise that other people beside the banks take up Treasury Bills. Still, that is the argument, and that question too has naturally been considered by my right hon. Friend, and, in doing so, he has had the assistance of the banks themselves, and it is not the first direction in which he has had their assistance during the war. The fact remains, as far as the banks are concerned, that their profitability depends not just on one factor alone but upon the results of all their operations, which are now being undertaken in times of great difficulty and risk that we are all passing through, and in times in which they have not increased their general charges to their customers. And so, looking at it from that point of view, my right hon. Friend is satisfied that the criticism on that score is not founded. All the critics can take consolation in this reflection, that, if he is wrong and the banks do in fact on balance make largely increased

profits, these profits will fall to the Exchequer under the 100 per cent. Excess Profits Tax. So much for that point.
Another point dealing with the larger financing of the war was raised by my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne), who made a most interesting speech and raised many important points, and he will excuse me for dealing with only one point. He asked that there should be a survey, as I understood it, of non-essential industries. That is not in my direct purview, but I always understood that that is being done. I think my right hon. Friend in his opening speech dealt with some aspects of that. Then my hon. Friend raised the question, which he has raised before, of his desire to have lottery bonds. I suppose that like some other things in the world this is one of the things about which people feel strongly one way or the other and about which their views never get reconciled. But taking it from the Exchequer point of view, my right hon. Friend has looked at it, as, indeed, his predecessor looked at it, and I expect as did his predecessors for many years past, but they came to the same conclusion—that it really is not a suggestion which they could put before the House and the country. In fact, it is felt that in present circumstances it would not be helpful but very likely would be harmful, in some cases, to the campaign for small savings being successfully carried out. So I leave it there, so far as my present right hon. Friend is concerned, but I have no doubt that so long as my hon. Friend is in the House he will deal with it as the years go by.

Sir J. Wardlaw-Milne: I think perhaps my right hon. and gallant Friend did not do me full justice. I did not put forward the idea of lottery bonds as being a tremendous advantage in itself but as a possible alternative, in these times of stress, to forced loans.

Sir H. Fildes: Will my right hon. and gallant Friend indicate whether he intends that shrouds and coffins shall be open to the luxury tax?

Captain Crookshank: Life, of course, is a lottery, but I was dealing with some form of premium bonds. I hope I was not doing an injustice to my hon. Friend, but even so I wanted to indicate to him that the idea would not be acceptable.


A similar point, which has nothing to do with the lottery aspect, was that made by my hon. Friend the Member for Gloucester (Mr. Boyce), who asked whether National War Bonds might be allowed in payment of taxes. He thought that that might be a good plan, but whether it would be or not it would not help us to get any more cash. What would happen would be that more bonds would be sold because of this facility, but at the same time we should be getting less in cash from taxes, and I think that that suggestion, too, is not one which is likely to be accepted.
Much of this Debate, apart from the matters with which I have dealt, has been about the Purchase Tax, and perhaps I had better say something about that. The hon. Member for North Battersea (Mr. Douglas) was, I think, in a maiden speech the first one to open out, and I would like to congratulate him on the confident way in which he addressed the House and also on the observations he made, although I cannot say that I must necessarily be taken as accepting all of them. The Purchase Tax is, no doubt, the part of the Bill which will be most discussed, if only for the reason that it is a new form of taxation in which people are more interested than in the older taxes, although they are far more burdensome. My hon. Friend the Member for Sowerby (Mr. McCorquodale) asked whether this would be a "war-time only" tax. I am afraid it is not usual for Chancellors of the Exchequer to bind themselves even in war-time as to what they may or may not have to do, and I hope no one will want to bind a future peace-time Chancellor as to what form of taxation may then be required. Certainly it would not be safe for me to make any promises; I do not think they would be of any value if I did. But I do say that if this Purchase Tax were to be a long-term permanent tax, there would probably have to be many adaptations in order to achieve a form of taxation more sensitive than the rougher form in which the tax is bound to be at the present time as an urgent war tax. I am not going to discuss again the suggestion whether or not it would be better to have this tax in the form of a sales tax. We have had that out before, and those who differ will probably go on differing. But I do not

think there can be anything in the argument that we should get more out of it by having a retail tax. Whether you get more or less depends on the rate at which you do the taxing. If you set out in the hope of being able to raise £110,000,000 in a full year, if you started collecting tax in another way the charge would be at a different rate, but it does not follow that you would get more or less. There are many other reasons against a retail tax which have been already discussed.
There has been some anxiety in some of the speeches about the possible reaction of the tax upon the export trade. Of course, the President of the Board of Trade has been in these discussions, and I am able to point out at this stage something which I think hon. Members are very apt to overlook. That is that what is in the Seventh Schedule is what is within the field of taxation, and there are three columns even there, so that not everything is at the highest rate. But, just because you see in the first and second columns of the Schedule what seems at first an alarming list of chargeable goods, perhaps you are apt to overlook the enormous number of things which are not in the Bill and do not come within the field of the tax at all. Raw materials are exempt, as are all the machinery in industry and in agriculture—hon. Members can see what a vast amount that is, and as I mention these things perhaps they will try to think how the export trade would be affected by the withdrawal of the tax from this group of commodities—food and drink are free—I think I am right in saying that. as far as the United States are concerned, which is one of our most important export markets, something like a third of our exports come under the drink category—tobacco, coal—another export commodity which is not connected with this Bill at all—oils, fuels, commercial transport, packing materials. So I could go on. but I do not want to give a string of things. What I want to impress on Members is that there is a vast amount of the things which go into the export trade which have nothing to do with this Bill or this Schedule at all. What is within the Bill and might be exported is a comparatively small field.
On the other side we have the advantage that in these export markets we no


longer have the fierce competition from many parts of Europe during war. A great many of the commodities which the Americans used to take from Europe either they will not get at all or they will more or less have to get from us, because exporting from the West of Europe is not a practical proposition with a number of Powers to-day. But, of course, we cannot dispute that, if a country charges an import duty based upon the open market wholesale price of goods in the country of origin, it is likely to consider that the Purchase Tax is included in the wholesale price. I would impress on the House that the tax does not apply to exports; the goods which are exported do not have to pay the tax. But I appreciate that that is not the difficulty which has been raised to-night. The difficulty is whether the importing country considers the wholesale cost as being what it is without the Purchase Tax or as what it would be in this country cum Purchase Tax. That is the point at issue. We are already making, and will make, certain representations of a suitable kind to the countries concerned, which may wish to consider the effects of this new tax before they take a decision as regards their own tariff laws and tariff practices.

Sir J. Wardlaw-Milne: Have those representations been made to America?

Captain Crookshank: Yes, they are being made. My right hon. Friend the President of the Board of Trade is not unduly alarmed about the position.
I should like now to turn to another point which it might be useful to clear up at this stage. The hon. Member for Finsbury (Mr. Woods) spoke about children's garments, made at home, and was afraid that knitting wool might come under the tax. I can say that it is not intended that knitting wool should be caught, and we are advised that, in connection with the definition of "haberdashery" in line 17 of the Schedule, there is no possibility of wool being thought to be haberdashery. Wool as such is not mentioned and, therefore, is clear of the Bill, but if there is any fear that because it is sold in haberdashers' shops it may be considered to be haberdashery, we will insert an Amendment to make it quite clear. As at present advised, however, we are under the impression that, like all the other things which are not mentioned, knitting wool is not caught. If there

should be any doubt about it, we will see that the doubt is removed by an Amendment at the proper time.

Mr. Ellis Smith: Does that not apply to other matters?

Captain Crookshank: I cannot answer off-hand about other things.

Mr. Woods: I understand that when the wool is sold on cards in small quantities as mending wool, it becomes haberdashery. The question is when it ceases to be haberdashery and becomes wool.

Captain Crookshank: That may be the question, but the point is that it should not come in.
Another point with which I should like to deal now, in order to save controversy and unnecessary discussion, is that raised by my hon. Friend the Member for Yardley (Mr. Salt), who asked about drugs of "an exceptionally costly character" which are included in the Schedule, in page 44, as goods which are to be exempted from the tax. The hon. Member did not think it possible to get any definition of what we had in mind. We have been able to do so because a list of drugs of "an exceptionally costly character" has been drawn up by the Ministry of Health, with the help of very eminent medical men. All of them happen to have agreed on this, so I hope the House will not want to disturb what is a somewhat unusual thing—complete medical agreement. The list includes drugs which are themselves costly, such as special injections for rheumatism and preparations known as M and B 693 for pneumonia; it includes also sera as well as expensive drugs which have to be used for very long periods, if not for life. That is why hon. Members will notice in that column particular reference to insulin and liver extracts. They are costly but might not come under the "exceptionally costly" definition. But once they are used, they have to be continued and that is why they are included. As regards appliances, the list includes artificial limbs and spinal jackets. So hon. Members can rest assured that it is possible to define a list which will come in that list. The Ministry of Health have very great experience in this matter from the administration of the Health Insurance Act, and I do not think there will be any difficulty on that score.
I think I have dealt with all the important points raised, but, as I see my hon. Friend the Member for South Croydon (Sir H. Williams) is present, I will interject something which, I think, will satisfy him, although it is outside the Purchase Tax. He was afraid that the imposition of the Purchase Tax might lead to anti-dumping duties in foreign countries for exported goods. But he will see from Clause 29 that there is no possibility of that because there will not be a tax on the goods as exported. We are advised that there is no possibility of it under that Clause, and, if he studies it, he will see that there is particular reference to the problem of allowance under Subsection (2)—"of an allowance for tax paid…."

Sir H. Williams: It does not matter in the least what we put in this Bill. What dominates the matter is the Act of Congress of the United States, which deems the home consumption value of goods—goods sold wholesale and including tax.

Captain Crookshank: I think the Clause does cover anti-dumping. It is not a question of tariff with which I am dealing but a question of special anti-dumping. I think he will see it is met as far as we can see.
I should like to go back and say a word or two upon the Purchase Tax. Of course, it is admitted everywhere, and by my hon. Friend—and no one speaking on this tax could do otherwise than admit it—that the tax must, in the very nature of things, press to some degree on all households in this country, but by the way it is now presented to the House in this Bill it does avoid hardships to those with the smallest incomes, and particularly those with children. I would remind hon. Members of the great mass of commodities, goods and services which are not covered by the tax. I would refer them to the Budget speech of the Chancellor, in which he pointed out that something like 80 per cent. of the goods which came within the cost-of-living index are not affected by the tax, and that the expenditure on the lower rate of the Schedule represents about 12 per cent. of the household expenditure which comes within the cost-of-living index. So that, granted that the cost-of-living index is

reasonable in the circumstances of to-day, we find that out of 100 articles, 80 have nothing to do with this tax at all, 12 come within the reduced rate, and eight only within the higher.

Mr. E. Smith: On what basis have these articles been selected?

Captain Crookshank: I should say that they are selected from the point of view that my right hon. Friend put in his Budget statement: first, that the Exchequer requires more cash to carry on the war, and, second, that it is necessary to reduce civilian consumption. He has kept out of the sphere of the tax 80 per cent. of what comes within tie cost-of-living index, and the Schedule deals with other articles in a way which makes the tax a consumer's tax on personal and domestic expenditure which one can reasonably expect should be limited in war-time.
Hon. Gentlemen say that this is a serious tax for those who are about to get married. They are going to set up house and will have to pay more than they would otherwise have done for the articles of furniture they require. I am not one to give advice to those about to get married, but I think it is probably true that in war-time the great bulk—I have not asked the statisticians, but one's observations show it—of marriages are those of men serving, and there, naturally, the question of setting up households does not really arise on anything like the scale it would in peacetime. I should think that is common knowledge. That being so, those who insist upon setting up house in these times will, I am afraid, have to pay more for doing it because some of the articles of furniture will be more expensive as a result of the tax. That may well be, but again, it might be wiser not to rush into setting up house; marry if you like, but save what you can until the time when peace has come and the household may be all the more happy and contented, if for no other reason than the fact that the couple have been able to choose their furniture together.
There is another point which it is necessary to emphasise now. Last time I spoke I dealt with the question of forestalling and gave a warning to wholesalers and retailers who may feel tempted to purchase outside their normal scale and


thereby bring themselves within one of the Clauses of the Bill. I should like on this occasion to point out that if the Bill passes in anything like the present form, which I have every hope it will do, it will be necessary—indeed, it will be a statutory duty—for those who are concerned to apply for registration, when they have the full instructions, which will be published. Under the Bill there is a heavy penalty, for not applying in due time, of a fine of £100 and £10 a day for every day they fail to register. Once the House has accepted the scheme and it becomes law, it is important that we should get it into operation as soon as possible for reasons I have indicated. One of the essential steps is that those who should do so should register. So I give that warning to all concerned.
That, I think, is all that I need say at the moment upon that subject, because we shall have other opportunities of discussing it, but I should like, if hon. Members opposite would take it in the way that I put it to them, to say that my right hon. Friend and I do recognise that in accepting the principle of this tax they have made a real concession in the national interest. We do realise that at one time they were not inclined to consider it at all, but they have come to see that in order to bring this war to a successful conclusion everyone will not only have to give a great deal of money—this Bill will see to that—but have to concede a lot in the sphere of opinion. They have accepted the principle, and I can assure them that we recognise what they have done, and I can only hope that in a similar way they will help us to get the Bill on to the Statute Book as soon as possible. I also ask them to recognise that in the Schedules, as in the provisions of the Measure itself, which have been the result of a great deal of thought and consultation, we have done our best to do what we set out to do, that is not to impose any more hardship than was unavoidable and to take definite steps to see that people who can restrict their purchases of these articles—which, incidentally, may be in short supply for other reasons—do so. If they do not, we shall get something from them by the Purchase Tax; and if they do restrict their consumption, following the advice which has been given to them from every quarter, I hope that they will lend their savings to the State in order to fill the

financial coffers which it is so necessary to fill in order to win the war.

10.23 p.m.

Sir Joseph Lamb: I know that it is unusual to continue the Debate after the Minister has spoken, but my excuse, if excuse is necessary, is that although I have sat through nearly the whole of the Debate, I have been unable to get an opportunity to make the two points which I wish to put before the House. They are points which I believe to be of great importance, and neither has been touched upon previously. The first point is the effect of the increasing Estate Duties upon large agricultural estates. In the Sixth Schedule we find the amount of the duties upon these estates, but it was in the introductory Budget that the Chancellor told us there was an increase of 10 per cent., and that does not appear in this Schedule. I am not asking for the exemption of agricultural estates—that is one of the reasons why I could not put down an Amendment on the Committee stage and why I must ask the indulgence of the House now—and I am not attacking the principle, which is a very big one, of the over-taxation of landed estates, but what I am asking is that due consideration should be given to agricultural estates in the application of this taxation. I was struck by what an hon. Member said earlier, that it is not what we collect but the manner in which we collect it that is important. Unless we are careful these duties will have a deleterious effect upon food production in this country—I hope the Minister of Agriculture will pay attention to what I am saying. We have experience of what happens at death owing to the heavy duties which fall upon a large landed estate. Undoubtedly large estates are more economical to manage than small ones, because there is a greater concentration of management expenses and of the costs of upkeep and repairs. There is a good deal that could be said about that, but I will not go into that matter now.
In the Schedule, Estate Duty ranges from 1 per cent. to 65 per cent. I admit that the 65 per cent. is on an estate of £2,000,000, which would be a very large one, but 65 per cent. is also a very large percentage. The percentage of 55 is on an estate of £1,000,000. There are very large estates which sometimes come to


that sum. Even so, no less than half the value is taken on those estates. Those are very big charges to place upon land, because of the results. In actual practice it is found necessary to sell the estate. I am not taking the point of view of the landlord, but am concerned about the production of food. Such sales take place at forced prices, which are not always financially sound for the land. The value is affected very largely because of those who are not producers of food who will use the land for that purpose, but wish to invest in land and put the price up higher than is legitimate for food production. Some farmers will compete for the farm of a neighbouring farmer because it has been well farmed and is in good condition. The farmer who is in possession of the farm has to buy it; if he does not, he loses his home and the benefit of all the improvements which he may have made. There are many cases of an estate having been broken up, and of farmers being forced to buy their farms. It means that they lock up capital which ought to be used for the production of food. If he does not use his own capital, he has to get it from a financier. That means that, in almost all instances, the amount of interest which he has to pay, plus repairs which the landlord would do in the ordinary way, amount to his being saddled with a higher rent.
I ask the Government, not for relief, but that they should endeavour to find some method of application which will not have the results that have accrued in the past. Could not the Government take over a certain amount of land, instead of cash? That would mean that part of the estate would not be sold. I believe the power to do so exists, but that the Treasury refuse to accept land, saying that what they want is not land but cash. That causes a great deal of hardship. There is a rule whereby payment can be made over eight years. It has existed for a long time, and has been operated, but it does not prevent the sale of land and the break-up of the large estates. I hope I shall be able to convince the Minister. If I have not done so, it is not because I am deficient in material but because I am speaking against time, which is always difficult. I hope I have convinced him that the ex-

traction of this money from the land can be done in a way that will not have the ill effects that it has had in the past. I hope that he will find some way to help me.
The other point will not take much time. I may have to put down an Amendment on it on the Committee stage, but I do not wish to do so: I refer to the inclusion of china in the first section of the standard Schedule. I promised not to take up much time, and I will not break my promise.

10.30 p.m.

Mr. Molson: I make no apology for speaking at this hour, as the Financial Secretary rose to reply to the Debate some 35 minutes before the customary time in spite of the fact that a number of hon. Members had indicated that they wished to address some observations to him. I should be grateful if he would do me the kindness of listening to what I have to say now.
I should like to associate myself with the general arguments of the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) on this side of the House and the hon. Member for Ince (Mr. G. Macdonald) on the other side. I think there has never been introduced into this House a Budget that has been so little opposed and so much criticised as this. The reason is that not only in this House but also in the country there is a widespread feeling that it is not in keeping with the intensity of the war effort which is necessary at the present time. There is a feeling that the Treasury is falling short in its policy compared with what is being done by the other Goevrnment Departments.
I think the Chancellor of the Exchequer confused two of the great difficulties of conducting this war when he spoke of our foreign resources as being capable of being used for making up for the deficit on the Budget. As I see it, in conducting this war we have in the first place to balance our expenditure inside this country, which is relatively easy to do, and at the same time we have to maintain our purchasing power in foreign currencies in order to import food, raw materials and munitions from abroad. That is a vastly more difficult undertaking and one which will he discussed by this House to-morrow. I feel that it is entirely wrong to suggest that our resources in foreign exchange can be used


to make up for a deficit in our internal war expenditure. We have had forced upon us something in the nature of a closed economy; and, so far as our expenditure in this country is concerned, it is to a very large extent a transfer from peace expenditure to war expenditure, and our industries and our men are now being employed upon war purposes where previously they were employed upon purposes of peace. It is for that reason that the taxable capacity of this country has been very greatly increased by the war activities and the intensification of the production of arms.
If we are to avoid inflation in this country, it can only be by taking out of the pockets of the consumers, either in taxation or in loans, an amount equal to what is being expended upon armaments. It was of great interest to me that the hon. Member for Chesterfield (Mr. Benson) from the opposite benches should have emphasised so strongly the fact that the burden upon the people is set by our expenditure, and we can choose as to whether that burden is to be spread in an unscientific way by inflation or whether it is to be spread more fairly and justly by taxation and by loans. I hope that the very interesting speech which he made carried conviction to hon. Members on his own benches, who must be prepared to accept on behalf of the wage earners a very great burden for paying for the war. It is, indeed, more in the interest of the workers than anyone else that the cost of this war should be borne by taxation and by loans, and not by inflation. If anyone has any doubt on that point, I would refer him to the table in Mr. Keynes's book on the financing of the war.
Because all our expenditure on the war is, in the true sense of the word, uneconomic, one would prefer that the largest possible proportion of it should be raised by taxation. But because, even in war-time, you cannot expect men to work for nothing, it will have to be paid for to a large extent out of loans—which means, by the promise of enjoyment to be deferred until later. We should lay it down as a principle that at least half of the total expenditure upon this war should always be met out of taxation; as the cost of the war increases, the burden of taxation must be raised proportionately.
I ask, however, that finance shall not only be made to keep step with our war effort, but that it shall be used to assist the diversion of our man-power and industry from the pursuits of peace to the pursuits of war. By reducing the standard of living of the civilian population and thus reducing domestic consumption, the tasks of the Minister of Supply in producing armaments and of the President of the Board of Trade in stimulating our exports will be made easier. This reduction in the consumption of the civilian population should be brought about by taxation, by taking purchasing power out of the hands of the people, rather than by some elaborate and rigid system of rationing. The taxes upon which the Chancellor of the Exchequer is relying at present are, in a large number of cases, taxes upon luxuries. As he succeeds in eliminating the consumption and production of those luxuries, he will tend automatically to reduce his income. Therefore, the taxation should not be confined to luxuries, desirable as it may be that luxuries should be taxed; there must also be taxes upon necessaries if we are to continue, as I think we shall have to do, with indirect taxation. At present neither taxation nor saving is on a sufficiently great scale. The Chancellor should see that both are increased. If they are not sufficiently increased, the effect will be inflation and a rise in prices, which will not be to the advantage of anyone in this country, and will be most harmful to the wage-earners. I entirely agree that the Purchase Tax should be solely a war-time Measure. As soon as we get back to peace we shall want to increase consumption, to prevent an automatic increase in unemployment. To have a Purchase Tax in time of war, which can be removed upon a return to peace, will facilitate the transfer back of industry from a basis of war to a basis of peace.
I hope that this Chancellor of the Exchequer has not finally rejected, as his predecessor did, Mr. Keynes's scheme of compulsory savings. I hope also that hon. Gentlemen on the benches opposite, especially those who have found themselves in agreement with the arguments of the hon. Member for Chesterfield (Mr. Benson) will feel that there is a great deal to be said for that scheme. I was impressed by the speech of the hon. Member for Ince (Mr. G. Macdonald), who


said that if munition workers are obtaining large incomes they are also working extremely hard. If it is impossible, as I believe it is at present, to maintain the full consumption of the civilian population while, at the same time, intensifying our production of armaments and maintaining our export trade, then I would urge that there is a great deal to be said for the system of compulsory savings advocated by Mr. Keynes which will postpone until a later time the enjoyment of the fruits of the labour which is being given now.
There are two insurance funds under Government control at the present time which can be used for smoothing out those fluctuations of industrial prosperity and depression which have been the cause of so much unemployment. One is the Unemployment Insurance Fund, and the other is the National Health Insurance and Pension Fund. At a time like this, when unemployment is very low, largely due to an entirely artificial stimulus given to industry by great Government expenditure, those two funds should have an income greatly exceeding their expenditure, and should build up reserves, so that afterwards, when peace comes and there is a danger of a return of unemployment, it should be possible for these funds to pay out much more than their income. That I believe to be one of the few practical proposals which have so far been made for evening out the hills and valleys of unemployment. I hope therefore during the war that the Labour party will not urge any reduction in the contributions that are now being paid to those insurance funds and that they will welcome the building-up of a large surplus for reserve purposes.
I would also urge upon the Chancellor that this is a time when a real effort ought to be made to reduce the volume of local debt. For the last 30 years or more the public debt of local authorities has been steadily increasing. Even during the financial crisis of 1931, the increase was not wholly arrested, and with the prospect of a declining population and of great economic difficulties after the war, and with a vastly increased National Debt, it surely would only be a measure of reasonable prudence if the Government brought some pressure to bear upon local authorities now, by an

increase in their rates, to pay off, at an increased rate and increased speed, the very heavy debt which they have contracted during the last 20 or 30 years. All such repayment would be available for lending to the Government.
I now come to the question of taxation, and I make no complaint about the high level of Income Tax and Surtax. I would only point out that when the rich have made the largest contribution that they can make, even to the total confiscation of their income, that will still be only a small proportion of the cost of the war. I hope, therefore, that hon. Gentlemen opposite, who are as anxious as anyone else in this House to win the war, and to win it in a way that will avoid the danger of inflation, will be prepared to accept the need for direct taxation of the wage earners. Whether that should be done, as I would advocate, by increased contributions to the Pensions Fund, of which the Treasury is at present bearing 60 per cent. of the cost, or whether there should be some contribution to direct taxation, and perhaps in the form of a stamp on the weekly insurance card, I express no final opinion. I do believe, however, that, if we are to pay for at least half the war out of revenue each year, an entirely new and much wider source of taxation will have to be found. I am convinced that the wage earners of this country must and will be willing to make their contribution towards that. If there, were some proportionate tax upon all receipts, whether wages or any other kind of payment, it would, I believe, open up a new and almost illimitable source of income and one by which, by maintaining the purchasing value of the £, would not only be very beneficial to the country as a whole, but serve to maintain the purchasing power of the workers of this country.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time. Bill committed to a Committee of the Whole House for Thursday.

Orders of the Day — AGRICULTURE (MISCELLANEOUS WAR PROVISIONS) (No. 2) [Money].

Resolution reported,
That, for the purposes of any Act of the present Session to make certain amendments in the law relating to agriculture and agricultural land in connection with the present


war, it is expedient to authorise the payment out of moneys provided by Parliament of—

(a) any increase in the sums payable by virtue of Section fifteen of the Agriculture (Miscellaneous War Provisions) Act, 1940, by reason of the extension of that Section to the drainage of agricultural land by all methods of field drainage and to the cleansing or other improvement of ditches on any such land;
(b) any increase in the amount payable out of moneys so provided by reason of the extension, until the thirtieth day of September, nineteen hundred and forty-eight of—

(i) the period during which, under Subsection (1) of Section twenty of the Agriculture Act, 1937, the Minister of Agriculture and Fisheries may pay to the owner of any herd of cattle in Great Britain such sums as the said Minister thinks fit to expend for the purpose of securing so far as practicable that the herd will be free from tuberculosis; and
(ii) the period during which, under Section twenty-one of that Act, the said Minister, may expend sums with the object of eradicating bovine tuberculosis;

(c) any such increase in the expense incurred by the Secretary of State—

(i) under Section twenty-nine of the Agriculture (Miscellaneous War Provisions) Act, 1940, in so far as not recovered thereunder, and
(ii) in making grants under that Section in respect of expense incurred by or recoverable from owners of land,
as is attributable to the extension of that Section to the construction and repair of sluices and flapvalves, the restoration of banks and embankments, the erection of Embankments and the widening and deepening of the channels of watercourses; and
(d) any such increase in the sums payable by way of compensation under the Compensation (Defence) Act, 1939, by virtue of Section twenty-three of the

Agriculture (Miscellaneous War Provisions) Act, 1940, as is attributable to the extension of that Section to land kept or preserved mainly or exclusively for purposes of sport or recreation where such land is taken possession of by the Secretary of State and certified by him as being uncultivated or not cultivated in accordance with the rules of good husbandry.

Resolution agreed to.

Orders of the Day — AGRICULTURE (MISCELLANEOUS WAR PROVISIONS) (No. 2) BILL.

Considered in Committee; Reported, without Amendment; read the Third time, and passed.

Orders of the Day — GREENWICH HOSPITAL AND TRAVERS' FOUNDATION.

Resolved,
That the statement of the estimated Income and Expenditure of Greenwich Hospital and of the Travers' Foundation for the year 1940, a copy of which was presented to this House on 8th May, be approved."—[Captain A. Hudson.]

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Mr. Boulton.]

Adjourned accordingly at Ten Minutes before Eleven o'Clock.